Stock Purchase Agreement - Cass & Cass Ltd. and Getty Images Inc.
SEPTEMBER 20, 2000
AGREEMENT FOR THE SALE AND PURCHASE
OF THE ENTIRE ISSUED SHARE CAPITAL OF CASS & CASS LIMITED
BETWEEN
THE SELLERS LISTED IN SCHEDULE 1
AND
GETTY IMAGES INC.
WEIL, GOTSHAL & MANGES
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TABLE OF CONTENTS
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1 INTERPRETATION........................................................... 1
2 AGREEMENT TO SELL........................................................ 7
3 CONSIDERATION............................................................ 7
4 COMPLETION............................................................... 7
5 WARRANTIES............................................................... 9
6 LIMITATIONS ON WARRANTY CLAIMS...........................................12
7 UNDERTAKINGS OF THE WARRANTORS...........................................14
8 INDEBTEDNESS.............................................................15
9 RESTRICTIONS ON TRANSFER.................................................16
10 INDEMNITY................................................................17
11 ANNOUNCEMENTS............................................................17
12 ASSIGNMENT...............................................................17
13 RIGHTS OF THIRD PARTIES..................................................17
14 VARIATION................................................................17
15 WAIVER...................................................................18
16 COSTS....................................................................18
17 NO RECOURSE..............................................................18
18 COUNTERPARTS.............................................................18
19 NOTICES..................................................................18
20 GOVERNING LAW............................................................19
21 JURISDICTION.............................................................19
22 ENTIRE AGREEMENT.........................................................19
SCHEDULE 1 THE SELLERS......................................................20
SCHEDULE 2 INFORMATION ABOUT THE COMPANY....................................21
SCHEDULE 3 WARRANTIES.......................................................23
SCHEDULE 4 TAX WARRANTIES...................................................54
SCHEDULE 5 REAL PROPERTY....................................................58
Part A Registered Land......................................................58
Part B Unregistered Land....................................................59
Part C Other Property Worldwide.............................................60
SCHEDULE 6 ARTIST AGREEMENTS................................................61
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TABLE OF CONTENTS
(CONTINUED)
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SCHEDULE 7 HAT HILL WARRANTIES..............................................62
SCHEDULE 8 PHOTOGRAPHER AGREEMENTS..........................................63
SCHEDULE 9 M. LOCO PHOTOGRAPHER AGREEMENTS..................................64
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THIS AGREEMENT is made on September 20, 2000 between the following parties:
(1) The persons whose names and addresses are set out in schedule 1 other than
the Hat Hill Trustees (together the "SELLERS" and each a "SELLER"); and
(2) Getty Images Inc. whose principal place of business is at 701 North 34th
Street, Suite 400, Seattle, Washington 98103, USA (the "BUYER").
WHEREAS
(A) The Sellers have agreed to sell and in reliance upon the representations,
warranties and undertakings set out in this Agreement the Buyer has agreed
to buy the Shares (as defined below) for the consideration and upon the
terms set out in this Agreement.
(B) Cass & Cass Limited (the "COMPANY") which has also traded under the name
"The Image Bank UK" is a private company limited by shares incorporated in
England and Wales, certain details of which are set out in schedule 2. The
Sellers together with the Hat Hill Trustees are the legal owners of all the
issued share capital of the Company.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 In this Agreement, and the Recitals the following expressions have the
following meanings:
"ACCOUNTS" audited accounts of the Company for the financial year
ended on the Accounts Date prepared in accordance with
the Act and UK GAAP and comprising a balance sheet,
profit and loss account, notes and directors' and
auditors' reports or statements included or annexed
thereto;
"ACCOUNTS DATE" in relation to any Financial Year of the Company, the
last day of that Financial Year;
"ACT" the Companies Act 1985;
"AMENDMENT the letter in the agreed form amending the contract of
LETTER" employment for Mark Neil Cass;
"ARTIST the artist agreements set out in schedule 6;
AGREEMENTS"
"APPROVED" approved by the Inland Revenue for the purposes of
Chapter I of Part XIV of the Taxes Act and a reference
to "APPROVAL" is to be construed accordingly;
"BUSINESS DAY" a day other than a Saturday or Sunday or public holiday
in England and Wales;
"BUYER'S GROUP" the Buyer, or a company which is, on or at any time
after the date of this Agreement, a subsidiary or
holding company of the Buyer or a subsidiary
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of a holding company of the Buyer;
"BUYER'S Weil, Gotshal & Manges of One South Place, London
SOLICITORS" EC2M 2WG;
"CASH" cash at bank and credited to an account in the name of
the Company and cash at hand;
"CASH the cash consideration to be paid to the Hat Hill
CONSIDERATION" Trustees in accordance with clause 3 in the proportions
set out in schedule 1;
"CLAIM" a claim by the Buyer for a breach of Warranty;
"COMPLETION" completion of the sale and purchase of the Shares in
accordance with this Agreement;
"COMPLETION has the meaning set out in clause 4.1;
DATE"
"CONFIDENTIAL all information not publicly known concerning the
INFORMATION" Company's constitution, business, customers or
commercial, financial or other affairs including without
limitation information relating to:
(a) the marketing of goods or services including,
without limitation, customer names and lists and
other details of customers, sales targets, sales
statistics, market share statistics, prices,
market research reports and surveys, and
advertising or other promotional materials; or
(b) future projects, business development or
planning, commercial relationships and
negotiations;
(c) but does not include information which is made
public by, or with the consent of, the Buyer;
"CONSIDERATION unregistered shares of common stock having a par value
SHARES" of $0.01 each in the capital of the Buyer to be allotted
to the Sellers in accordance with clause 3;
"DEED OF a deed of variation in the agreed form between the
VARIATION" Company and Landlord relating to the Premises;
"DISCLOSED the personal pension arrangement for Rubina Marshall
PERSONAL with HSBC and the personal pension arrangement for Ian
PENSION Morris with Virgin;
SCHEMES"
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"DISCLOSURE the letter dated the date of this Agreement from the
LETTER" Seller to the Buyer relating to the Warranties;
"DISCRETIONARY a settlement dated 13 March 1997 made between Wilfred
TRUST" Richard Cass (1) and Wilfred Richard Cass and Mark Neil
Cass (2) and known as the Wilfred Richard Cass
Discretionary Settlement;
"DISCRETIONARY the trustees of the Discretionary Trust;
TRUSTEES"
"ELECTRONIC any form of electronic or digital technology capable of
MEDIA" recording or transmitting Images in any form whatsoever
now or in the future, which shall include CD Rom;
"ESCROW the agreement in the agreed form between the Sellers,
AGREEMENT" the Buyer and the Escrow Agent named therein providing
for the retention of a certain number of the
Consideration Shares to be allotted to the Sellers
pursuant to clause 3 such retention to be released
(subject to claims) on the first to occur of 30 April
2001 or the signing off by the Directors of the Company
of audited accounts to 31 December 2000;
"FINANCIAL means the financial period of the Company commencing on
YEAR" 1 January and ending on 31 December;
"FRANCHISE means the TIB Images Licence Agreement, the TIB Footage
AGREEMENT" Licence Agreement or the M. Loco LDA and "FRANCHISE
AGREEMENTS" means all these agreements;
"HAT HILL the Hat Hill Sculpture Foundation;
TRUST"
"HAT HILL the trustees of the Hat Hill Trust;
TRUSTEES"
"HAT HILL the "A" convertible preferred ordinary shares of 1 Pound
TRUSTEES Sterling each representing 6 per cent of the issued
share capital of the Company at Completion;
"HAT HILL the Warranties relating to the Hat Hill Trust set out in
WARRANTIES" schedule 7;
"IMAGES" illustrations, pictures, representations or likenesses
obtained by photography, computer or any electronic
means and, if the context so admits, shall include
copies of the whole or part thereof recorded on
transparencies, prints, duplicates, negatives,
positives, prints or any other photographic material or
on Electronic Media;
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"INDEBTEDNESS" (a) all obligations of the Company for borrowed
money;
(b) all obligations of the Company evidenced by
bonds, debentures, notes or other similar
instruments;
(c) all obligations of the Company in respect of
letters of credit or bankers' acceptance or
similar instruments (or reimbursement
obligations with respect thereto);
"INTELLECTUAL (a) patents, trade marks, service marks, registered
PROPERTY" designs, applications and rights to apply for
any of those rights, trade, business and company
names, internet domain names and e-mail
addresses, unregistered trade marks and service
marks, copyrights, database rights, know-how,
rights in designs and inventions;
(b) rights under licences, consents, orders,
statutes or otherwise in relation to a right in
paragraph (a);
(c) rights of the same or similar effect or nature
as or to those in paragraphs (a) and (b) which
now or in the future may subsist; and
(d) the right to sue for past infringements of any
of the foregoing rights;
"LANDLORD" Wilfred Richard Cass and Mark Neil Cass and Pointon York
Trustees Limited;
"LAST ACCOUNTS 31 December 1999;
DATE"
"LOAN NOTES" the US$ denominated loan notes in the agreed form to be
issued by the Buyer to the Sellers as part of the
consideration referred to in clause 3.1;
"MANAGEMENT the unaudited profit and loss account of the Company for
ACCOUNTS" the period starting on the Accounts Date and ending on
the Management Accounts Date and the unaudited balance
sheet of the Company as at the Management Accounts Date;
"MANAGEMENT 31 July 2000;
ACCOUNTS DATE"
"MATERIAL an agreement (whether oral or written) involving total
CONTRACT" payment(s) of more than Pound Sterling5,000 (or
equivalent in another currency) or having a term in
excess of six months.
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"M. LOCO LDA" means the local development agreement dated 12 August
1998 between the Company and The Image Bank, Inc;
"M. LOCO means the photographer agreements entered into under the
PHOTOGRAPHER M. Loco LDA as specified in Schedule 9;
AGREEMENTS"
"PERMIT" a licence, permit, consent, certificate, registration or
other authorisation, used by or granted to the Company;
"PHOTOGRAPHER means the photographer agreements set out in Schedule 8;
AGREEMENTS"
"POLICIES" the insurance policies maintained by or in which the
Company has an interest;
"PREMISES" Aldus House, 17 Conway Street, London, W1P 6EF;
"PRICE" has the meaning given in clause 3.1;
"PROPERTY" each of the property or properties listed in schedule 5;
"SECURITIES the United States Securities Act of 1933, as amended;
AGREEMENTS"
"SECURITY a mortgage, charge, pledge, lien, option, restriction,
INTEREST" right of first refusal, right of pre-emption, third
party right or interest, other encumbrance or security
interest of any kind, or another type of preferential
agreement (including without limitation a title transfer
or retention arrangement) having similar effect;
"SELLER'S Lawrence Graham of 190 Strand, London WC2R 1JN;
SOLICITORS"
"SHARES" all the issued "A" convertible preferred ordinary
shares, "B" convertible preferred ordinary shares and
"C" convertible preferred ordinary shares, all of Pound
Sterling1 each in the capital of the Company and held by
the Sellers in the proportions specified in schedule 1;
"SOFTWARE means the software development agreement dated 24
DEVELOPMENT September 1998 between the Company and Dr Roy Gardener
AGREEMENT" and the Gardener Partnership, and includes any valid
addendum to such agreement;
"TAX" and as defined in the Tax Deed;
"TAXATION"
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"TAX AUTHORITY" as defined in the Tax Deed;
and "TAXATION
AUTHORITY"
"TAX DEED" the tax deed in the agreed form between the Sellers and
the Buyer;
"TAX the representations and warranties set out in
WARRANTIES" schedule 4;
"TAXES ACT the Income and Corporation Taxes Act 1988;
1988"
"TCGA 1992" the Taxation of Chargeable Gains Act 1992;
"TIB" The Image Bank, Inc
"TIB FOOTAGE means the licence agreement of reproduction rights in
1988" TIB footage dated 1 November 1995 between the Company
and TIB.
"TIB IMAGES the licence agreement of reproduction rights in TIB
LICENCE photos dated 1 November 1995 between the Company and TIB
AGREEMENT"
"UK GAAP" generally accepted accounting principles in the UK;
"VATA 1994" the Value Added Tax Act 1994;
"WARRANTORS" Wilfred Richard Cass and Mark Neil Cass; and
"WARRANTY" a statement set out in schedule 3 or 4 and "WARRANTIES"
means all such statements.
1.2 In this Agreement:
1.2.1 references to a "person" include an individual, body corporate
(wherever incorporated), government, state or agency of a state,
unincorporated association or partnership;
1.2.2 references to a document in the "agreed form" are to a document
agreed to and initialled by or on behalf of the parties;
1.2.3 references to a clause, schedule, or appendix are to a clause,
schedule or appendix of this Agreement, unless the context
otherwise requires, and references to this Agreement include the
schedules;
1.2.4 the headings in this Agreement do not affect its construction;
1.2.5 references to a statutory provision are to such provision as
amended or re-enacted and include all subordinate legislation
made under the relevant statute;
1.2.6 references to an English legal term for any action, remedy,
method of judicial proceeding, legal document, legal status,
court, official or any other legal concept shall, in respect of
any jurisdiction other than England, be deemed to
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include the legal concept which most nearly approximates in that
legal jurisdiction to the English legal term;
1.2.7 All obligations of the Sellers under this Agreement are several
unless otherwise stated;
1.2.8 a "SUBSIDIARY UNDERTAKING" or "PARENT UNDERTAKING" is to be
construed in accordance with section 258 of the Act and to a
"SUBSIDIARY" or "HOLDING COMPANY" is to be construed in
accordance with section 736 of the Act;
1.2.9 a reference in schedule 3 or 4 to the Warrantors knowledge,
information or belief is deemed to include knowledge,
information and belief which the Warrantors would have if any of
the Warrantors had made all reasonable enquiries of Rubina
Marshall, Guy Topham, Roderick McRea, Rowan Young, the auditors
and the solicitors to the Company and includes the knowledge,
information and belief of the Company and each of the Sellers
(to the extent they are not a Warrantor).
2 AGREEMENT TO SELL
2.1 The Sellers shall sell with full title guarantee and the Buyer shall buy
the Shares, with all associated rights as at or after the date of this
Agreement, free from any and all Security Interests upon the terms of
this Agreement.
2.2 Each of the Sellers waives all rights of pre-emption and any other
restrictions over any of the Shares conferred on him by the articles of
association of the Company or in any other way.
3 CONSIDERATION
3.1 The total consideration for the purchase of the Shares is Pound
Sterling11,782,500 (the "PRICE").
3.2 The Price shall be satisfied as follows:
3.2.1 the Loan Notes shall be issued to the Sellers in the proportions
provided for in schedule 1;
3.2.2 247,790 Consideration Shares shall be issued to the Sellers in
the proportions provided for in schedule 1 but subject always to
the provisions of clause 3.3 and clause 10; and
3.2.3 the Cash Consideration shall be paid to the Hat Hill Trustees in
the proportions provided for in schedule 1.
3.3 The Sellers agree and acknowledge that 50,144 of the Consideration
Shares (the "ESCROW SHARES") to be issued pursuant to clause 3.2.2 shall
be held upon and subject to the conditions of the Escrow Agreement.
4 COMPLETION
4.1 Completion shall take place at the office of the Buyer's Solicitors
immediately after the signing of this Agreement by all the parties (the
"COMPLETION DATE").
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4.2 At Completion, the Sellers shall deliver or procure the delivery to the
Buyer of the following:
4.2.1 executed transfer(s) of the Shares to the Buyer or the Buyer's
nominee(s) and the relevant share certificate(s);
4.2.2 the certificate of incorporation (including any certificate on
change of name), statutory registers current as at the
Completion Date and the common seal (if any) of the Company;
4.2.3 an executed power of attorney in favour of the Buyer or the
Buyer's nominee(s) in respect of the Shares;
4.2.4 bank statements showing the balance of each Company account on
the last Business Day prior to Completion and directions
amending the mandates in respect of those accounts;
4.2.5 resignation letters in the agreed form by each director and the
secretary of the Company acknowledging that each has no claim
against the Company in respect of breach of contract,
compensation for loss of office, redundancy or unfair dismissal
or on any other grounds whatsoever;
4.2.6 a letter of resignation in the agreed form from the auditors of
the Company, together with evidence that such letter has been
deposited at the Company's registered office in accordance with
section 394 of the Companies Act;
4.2.7 the Amendment Letter duly executed by Mark Neil Cass and the
Buyer;
4.2.8 the Tax Deed executed by the Sellers;
4.2.9 the title deeds to/certificate of title of the Property
including (but not limited to) Form 403a relating to a charge in
respect of a rent deposit deed dated 2 June 2000 and an
undertaking from the Warrantors to make all reasonable
endeavours to rectify the registration of such charge against
Alladvantage.com limited either by executing a new charge or by
applying to court for leave to file registration with the
Companies Registrar "out of time".;
4.2.10 the Escrow Agreement duly executed by the Sellers;
4.2.11 the Deed of Variation duly executed by the Company and the
Landlord; and
4.2.12 the legal opinions in the agreed form in relation to the Hat
Hill Trust and the Discretionary Trust.
4.3 At Completion, the Buyer shall:
4.3.1 cause the Loan Notes to be issued and delivered to the Sellers
as provided in Schedule 1;
4.3.2 issue o of the Consideration Shares to the Sellers in the
proportions provided for in column 4 of schedule 1, procure that
the Sellers are entered in the register of members of the Buyer
as the holder of the same and furnish each of the Sellers with a
definitive share certificate in respect thereof; and
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4.3.3 pay the Cash Consideration to the Hat Hill Trustees as provided
in schedule 1;
4.3.4 cause the Escrow Shares in the proportions provided for in
column 5 of schedule 1 to be held in accordance with the Escrow
Agreement;
4.3.5 deliver or procure the delivery to the Seller of the following:
(a) the Tax Deed executed by the Buyer;
(b) the executed Escrow Agreement;
(c) a copy of the resolution of the board of directors of
the Buyer approving the acquisition of the Shares and
the other transactions contemplated by this Agreement;
4.4 At Completion, the Company directors shall hold a board meeting at
which:
4.4.1 the transfer of the Shares (subject to stamping) to the Buyer or
its nominee(s) is approved for registration in the Company's
books;
4.4.2 Michael Wolfson and Robert Gubas are appointed as directors of
the Company and Michael Wolfson is appointed as secretary of the
Company;
4.4.3 PricewaterhouseCoopers are appointed as the auditors of the
Company; and
4.4.4 the Company's registered office is changed to 101 Bayham Street,
Camden Town, London NW1 0AG.
4.5 The Buyer shall not be obliged to complete this Agreement until the
Sellers comply fully with the requirements of clause 4.2.
4.6 If the requirements of clause 4.2 are not complied with on the date set
for Completion, the Buyer may:
4.6.1 defer Completion to a date not more than 20 Business Days after
that date (in which case the provisions of this Agreement apply
to Completion as so deferred); or
4.6.2 proceed to Completion so far as is practicable; or
4.6.3 terminate this Agreement.
4.7 If the Buyer postpones Completion to another date in accordance with
clause 4.6.1, the provisions of this Agreement apply as if that other
date is the Completion Date.
4.8 If the Buyer terminates this Agreement pursuant to clause 4.6.3, each
party's further rights and obligations cease immediately on termination,
but termination does not affect a party's accrued rights and obligations
at the date of termination.
5 WARRANTIES
5.1 The Warrantors jointly and severally represent and warrant to the Buyer
that, each Warranty is true and accurate and not misleading at the date
of this Agreement.
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5.2 The Warranties are qualified by matters fairly and specifically
disclosed in the Disclosure Letter but, subject thereto, shall not be
qualified by any actual or constructive knowledge on the part of the
Buyer or any of its agents, whether obtained through the Disclosure
Letter or otherwise.
5.3 The Warrantors shall not make a claim against the Company or any
officer, director or employee of the Company on whom the Warrantors may
have relied in negotiating this Agreement or in preparing the Disclosure
Letter.
5.4 The Warrantors acknowledge that the Buyer:
5.4.1 is entering into this Agreement in reliance on each Warranty
which has been given with the intention of inducing the Buyer to
enter into this Agreement; and
5.4.2 may rely on the Warranties in warranting to any subsequent buyer
of the Shares provided that:
(i) such buyer is a member of the Buyer's Group; and
(ii) if any such subsequent buyer should leave the
Buyer's Group then prior to such departure it
shall transfer the Shares to any other member of
the Buyer's Group.
5.5 Each Warranty is to be construed independently and (except where this
Agreement provides otherwise) is not limited by a provision of this
Agreement. The Warranties shall survive Completion of this Agreement.
5.6 The Buyer may elect that any loss or damage suffered or deemed to be
suffered by the Company which would not have occurred had a relevant
warranty been true shall be deemed to be suffered by the Buyer as a
consequence of that breach, and in that event in assessing the liability
of the Warrantors hereunder the Buyer shall not be required to
demonstrate that such loss or damage of the Company constitutes actual
loss or damage suffered by the Buyer. For these purposes, if the Company
would have incurred a loss had TIB enforced rights against the Company
under the TIB Images Licence Agreement or the TIB Footage Licence
Agreement in respect of matters giving rise to a breach of either of
those agreements the Company shall be deemed to have suffered such a
loss whether or not those rights are so exercised.
5.7 If the Warrantors are required by law to make any deduction or
withholding from any payment due under the terms of this Agreement, it
shall do so and the sum due from the Warrantors in respect of such
payment shall be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, the Buyer receives and
retains (free of any liability in respect of any such deduction or
withholding) a net sum equal to the sum the Buyer would have received
and retained had no such deduction or withholding been required to be
made.
5.8 Notwithstanding any other term of this Agreement the Buyer agrees and
acknowledges that its only right and remedy in relation to any breach of
Warranty given by the Warrantors in this Agreement shall be for breach
of the terms of this Agreement to the exclusion of all other rights and
remedies (including those in tort or arising under statute).
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5.9 The parties agree that any Claim shall first be settled from property
held in escrow under the Escrow Agreement, in accordance with the terms
of the Escrow Agreement, which shall provide that any such Claim shall
first be settled out of Escrow Shares held in escrow under the Escrow
Agreement provided that the Sellers can elect to settle such Claims by
cash payment to the Buyer, in which case the Escrow Agent shall continue
to hold and deal with the Escrow Shares as Escrow Property (as the term
is defined in the Escrow Agreement) on the terms set out in the Escrow
Agreement.
5.10 Each of the Sellers severally represent and warrant that:
5.10.1 the Shares are owned by the Sellers free of all Security
Interests or interests in favour of, or claims made by, or which
could lawfully be made by, any other person;
5.10.2 the Seller is entitled to sell or procure the sale of his full
legal and beneficial interest in the Shares to the Buyer on the
terms set out in this Agreement;
5.10.3 the Seller has the right, power and authority and has taken all
other actions necessary to enable him to enter into and perform
this Agreement and has secured all approvals that are required
for the performance of the transactions contemplated by this
Agreement;
5.10.4 the execution or delivery of this Agreement by the Seller does
not violate any provision of and will not result in a breach of
any applicable law;
5.10.5 this Agreement (and each document to be executed at or prior to
Completion) constitutes and imposes, or will when the relevant
document is executed, valid, legal and binding obligations of
the Seller fully enforceable in accordance with its terms;
5.10.6 completion of the transactions contemplated by this Agreement by
the Seller will not:
(a) conflict with, result in the breach of, constitute a
default under, or accelerate performance under the terms
of any contract, agreement, arrangement or deed (other
than the Franchise Agreements) to which the Seller may
be bound or affected; or
(b) constitute a default or an event which, with the lapse
of time or action by a third party, could result in the
creation of any Security Interest, equity, claim or
restriction on any of the Seller's Shares.
5.11 Notwithstanding clause 5.10 above each Discretionary Trustee severally
represents and warrants to the Buyer that:
(a) it has the requisite power and authority to enter into
and perform this Agreement;
(b) this Agreement constitutes valid and binding obligations
on it enforceable in accordance with its terms;
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(c) the persons signing this Agreement on its behalf are
duly authorised to do so and such authorisation has not
been revoked or otherwise restricted;
(d) the list of documents set out in the relevant opinion
referred to in clause 4.2.13 is a complete list of all
documents, deeds, or other agreements constituting the
Discretionary Trust and relating to the appointment of
the Trustees, or having a bearing on the trusteeship
thereof or on the Discretionary Trust's power and
authority to enter into this Agreement.
(e) (i) it is the joint legal owner of the Shares set
out opposite its name in Schedule 1 free from
all Security Interests of any nature whatsoever;
and
(ii) there is no Security Interest on, over, or
affecting the Shares set out opposite its name
in Schedule 1 and there is no agreement or
arrangement to give or create any such Security
Interest and no claim has been or will be made
by any person to be entitled to any of the
foregoing.
5.12 The Warrantors jointly and severally represent and warrant to the Buyer
that each of the Hat Hill Warranties is true and accurate in all
respects.
6 LIMITATIONS ON WARRANTY CLAIMS
6.1 The maximum aggregate liability of the Warrantors for all Claims (when
aggregated with all Claims under the Tax Deed) is Pound
Sterling11,782,500.
6.2 The Warrantors shall not be liable for any Claim:
6.2.1 unless the aggregate amount of the Claim and any other Claims
exceeds Pound Sterling120,000 (in which case the Buyer shall be
entitled to claim the whole of such sum and not merely the
excess);
6.2.2 unless the Buyer notifies the Warrantors of details of the Claim
(including an estimate of the amount claimed) on or before the
expiry of:
(a) seven years and one month from the Completion Date in
the case of a Claim for breach of any of the Tax
Warranties; and
(b) the date that is three months after the audited accounts
of the Company for the Financial Year ending on 31
December 2001 have been signed off by the directors of
the Company and in any event not later than 30 June
2002; and
(c) the Buyers provide to the Sellers upon their request
such further information relating to the Claim as
available to the Sellers and is reasonably required by
the Sellers for the purpose of evaluating the fact
and/or amount of their liability;
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6.2.3 which is not satisfied, settled or withdrawn within 12 months of
the date of notification of such Claim under clause 6.2.2 unless
proceedings in respect of it have been issued and served on the
Warrantors;
6.2.4 to the extent that such Claim would not have arisen but for an
act or omission of the Buyer after Completion and which the
Buyer knew would be likely to cause a Claim which might
otherwise have been avoided, provided that this clause shall not
apply to such acts or omissions which were:
(a) carried out in the ordinary course of business; or
(b) carried out pursuant to a legally binding obligation
which had been entered into by the Company or the
Sellers prior to the Completion Date; =
6.2.5 if and to the extent that the Warrantors pay at any time to the
Buyer an amount pursuant to a Claim and the Buyer subsequently
recovers from some other person any sum in respect of the matter
giving rise to such Claim the Buyer shall forthwith repay to the
Warrantors so much of the amount paid by the Warrantors to the
Buyer as does not exceed the sum recovered from such other
person by the Buyer less all reasonable costs, charges and
expenses incurred by the Buyer in recovering that sum from such
other person.
6.3 Any liability of the Warrantors hereunder shall be reduced by an amount
equal to the amount by which any taxation for which the Company is or
may be liable to be assessed or accountable is reduced or extinguished
as a result of any such liability.
6.4 Except as expressly provided in this Agreement all warranties and
representations on the part of the Warrantors whether express or implied
statutory or otherwise are hereby excluded and the Buyer acknowledges
and represents to the Warrantors that it has not relied on any
warranties, representations or disclosures other than those incorporated
in this Agreement and the Disclosure Letter.
6.5 The Warrantors shall not be liable hereunder in respect of any Claim by
the Buyer which, or the subject matter of which occurs or arises or to
the extent that the liability of the Warrantors in respect thereof is
increased as a result of:
6.5.1 any fact, circumstance, event or matter disclosed or deemed to
be disclosed in the Disclosure Letter or in this Agreement;
6.5.2 any matter or thing provided for by this Agreement or any
document annexed or scheduled hereto; and
6.5.3 any increase in the rates of taxation and any legislation not in
force at the date of this Agreement or as a result of any change
in legislation hereafter.
6.6 Any amount paid by the Warrantors hereunder shall be treated as having
reduced by that amount the consideration paid or payable for the Shares.
6.7 Notwithstanding that the liability of the Warrantors is joint and
several, in the event of death of either Warrantor, the estate of the
first of the Warrantors to die shall be released from all and any
liability in respect of the Tax Warranties and the Tax Deed save to the
extent of claims made and received on or before the first anniversary of
the date of death
13
<PAGE> 17
and all further liability shall be borne by the other Warrantor alone to
whom (and to whose estate) this Clause 6.7 shall not apply.
6.8 The limitations set out in this clause 6 do not apply to a breach of
Warranty or any other term of this Agreement:
6.8.1 resulting from fraud or negligent conduct;
6.8.2 in respect of a Warranty set out in paragraphs 2.1, 2.2.1, 2.3,
3.1 and 4.1, (inclusive) of Schedule 3; or
6.8.3 in respect of the representation and warranty set out in clause
5.12 or any of the Hat Hill Warranties.
7 UNDERTAKINGS OF THE WARRANTORS
7.1 The Warrantors undertake to the Buyer for itself and as agent and
trustee for the Company, that each of them will not do any of the
following things:
7.1.1 for a period of two years starting on the Completion Date,
either alone or jointly with, through or as adviser to, or agent
of, or manager for, any person directly or indirectly carry on
or be engaged, concerned or interested in or assist a business
which competes, directly or indirectly, with a business of the
Company as carried on at the Completion Date or at any time in
the twelve months prior to that date in a territory in which
that business is, or was carried on, at any such date or time;
7.1.2 for a period of two years starting on the Completion Date, do or
say anything which is harmful to the goodwill of the Company or
which may lead a person who has dealt with the Company at any
time during the twelve months prior to the Completion Date to
cease to deal with the Company on substantially equivalent terms
to those previously offered or at all;
7.1.3 for a period of two years starting on the Completion Date, other
than in the ordinary course of its business, on its own account
or in conjunction with or on behalf of any other person in
respect of the products or services of the Company's business
either seek to obtain orders from, or do business with, or
encourage directly or indirectly another person to obtain orders
from or do business with, a person who has been a customer of
the Company at any time during the twelve months prior to the
Completion Date;
7.1.4 for a period of two years starting on the Completion Date,
engage, employ, solicit or contact with a view to his engagement
or employment by another person, a director, officer, executive,
employee or manager of the Company or a person who was a
director, officer, executive, employee or manager of the Company
at any time during the twelve months prior to the Completion
Date (save that this restriction in this clause 7.1.4 shall not
apply to Guy Topham), in either case where the person in
question either has Confidential Information or would be in a
position to exploit the Company's trade connections; or
7.1.5 for a period of two years starting on the Completion Date, seek
to contract with or engage (in such a way as to affect adversely
the Company's business) a person who has been contracted with or
engaged to manufacture, assemble,
14
<PAGE> 18
supply or deliver goods or services to the Company at any time
during the twelve months prior to the Completion Date,
provided that nothing in this Clause 7.1 shall restrict Mark Neil Cass
from directly or indirectly carrying on, being engaged, concerned or
interested in by or through Artline Limited the business carried on by
that company as at the date of this Agreement.
7.2 Each undertaking in Clause 7.1 is accepted by each Seller as being
reasonable in the circumstances for the protection of the interests of
the Buyer and agrees each such undertaking constitutes an entirely
independent undertaking and, if one or more of the undertakings is held
to be against the public interest or unlawful or in any way an
unreasonable restraint of trade, the remaining undertakings shall
continue to bind all of the Sellers.
7.3 On receiving the Buyer's reasonable request, the Sellers shall (at their
cost):
7.3.1 do and execute, or arrange or procure to be done and executed,
each act, document and thing necessary to implement this
Agreement; and
7.3.2 give to the Buyer all information each of them possesses or to
which they have access relating to the Company's business and
allow the Buyer to copy any document containing that
information.
7.4 The Buyer acknowledges that Mark Neil Cass shall not be in breach of any
of the undertakings set out in clause 7.1 as a direct result of
performing his duties as an employee of a member of the Buyer's Group.
7.5 The Warrantors undertake to the Buyer for itself and as agent and
trustee for the Company, that each of them will not either alone or
jointly with, through or as manager, adviser, consultant or agent for a
person, directly or indirectly use or authorise, encourage or assist any
person to use the name consisting of or including any of the words
"TIB", "TIB UK", "THE IMAGE BANK" or "THE IMAGE BANK UK" or use in that
connection anything which is intended, or is likely to be confused with,
any of those names.
8 INDEBTEDNESS
8.1 By reference to the cash-flow forecast ("SHEET A") and list of balances
("SHEET B") appended to this Agreement the Warrantors hereby undertake
warrant and confirm that:
(a) the creditors and debtors separately identified in column (1) of
Sheet A have either been paid in full by the Company or have
made payment in full to the Company (as the case may be) save
for those three payments and one receipt set out in Sheet B;
(b) the total cash balance available to the Company (adjusted to
allow the sum of Pound Sterling10,113 to be retained by the
Warrantors) as at the close of business on 18 September 2000 (as
disclosed by Sheet B) was not less than Pound Sterling430,000.
8.2 To the extent that the total cash balance available to the Company as at
the close of business on 18 September 2000 is less than Pound
Sterling430,000 the Warrantors hereby agree to indemnify and upon demand
immediately to reimburse to the Buyer on a (Pound Sterling) pound for
(Pound Sterling) pound basis an amount equal in value to such shortfall
whether or not the Warrantors knew or could reasonably have known of any
such shortfall.
15
<PAGE> 19
9 RESTRICTIONS ON TRANSFER
9.1 The Sellers (i) understand that the Consideration Shares to be acquired
by them pursuant to this Agreement have not been registered under the
Securities Act, or under any state securities laws, and are being
exchanged in reliance upon federal and state exemptions for transactions
not involving a public offering, (ii) are acquiring the Consideration
Shares solely for their own account for investment purposes, and not
with a view towards the resale or distribution thereof or with any
present intention of offering or selling any of the Consideration Shares
in a transaction that would violate the Securities Act or the securities
laws of any state of the United States or any other applicable
jurisdiction, (iii) are each an "accredited investor", as such term is
defined under Rule 501(a) of the Securities Act, (iv) are sophisticated
investors (or in the case of those Sellers that are Trusts, are directed
by sophisticated persons) with such knowledge and experience in business
and financial matters to evaluate the merits and risks inherent in
holding the Consideration Shares, (v) have received certain information
concerning the Buyer, including, without limitation (A) the Buyer's
annual report on Form 10-K for the period ended 31 December 1999, (B)
the Buyer's quarterly report on Form 10-Q for the quarterly period ended
30 June 2000, (C) each of the current reports on Form 8-K filed by the
Buyer under the Exchange Act since 31 December 1999 and (D) the 1999
annual report to stockholders of the Buyer, and have had the opportunity
to obtain such financial and additional information and ask such
questions of representatives of the Buyer as desired in order to
evaluate the merits and the risks inherent in holding the Consideration
Shares and to verify the accuracy of any information that is provided to
the Sellers pursuant to this clause 10.1, and (vi) are able to bear the
economic risk and lack of liquidity inherent in holding the
Consideration Shares which have not been registered under the Securities
Act.
9.2 The Sellers will not, upon receipt of the Consideration Shares to be
received by them in exchange for the Shares held by them, offer, sell,
pledge or otherwise transfer or dispose of any of the Consideration
Shares except (i) as permitted by, and in accordance with, an exemption
from the registration requirements of the Securities Act (and based upon
an opinion of counsel if the Buyer so requests) or (ii) pursuant to an
effective registration statement under the Securities Act, and, in each
case, in accordance with any applicable securities laws of any state of
the United States or any other applicable jurisdiction. The Sellers
understand that the registrar and transfer agent will not be required to
accept for registration of transfer any of the Consideration Shares,
except upon presentation of evidence reasonably satisfactory to the
Buyer that the foregoing restrictions on transfer have been complied
with.
9.3 The Sellers acknowledge that the Buyer may issue stop transfer
instructions to its registrar and transfer agent with respect to the
Consideration Shares to be received by them in exchange for the Shares
in the event that any of them attempt to transfer such shares in
violation of this Agreement and that a restrictive legend will be placed
on the certificates delivered to them evidencing the Consideration
Shares in substantially the following form:
"This certificate and the shares represented hereby have been issued
pursuant to a transaction exempt from registration under the Securities
Act of 1933, as amended (the "Securities Act") and may not be sold or
otherwise disposed of unless registered under the Securities Act
pursuant to a registration statement in effect at the time or unless the
proposed sale or disposition can be made without registration in
reliance upon an exemption from the registration requirements
promulgated under the Securities Act."
16
<PAGE> 20
9.4 The Sellers acknowledge that, except as otherwise provided in this
Agreement, the Buyer is under no obligation to register the sale,
transfer, pledge or other disposition of the Consideration Shares to be
received by them or to take any exemption from registration available.
9.5 The Sellers hereby covenant to the Buyer that they will not transfer,
sell, assign, pledge, hypothecate or otherwise dispose of or encumber
any of the Consideration Shares issued to them pursuant to this
Agreement at any time during the period of 12 months from and including
the Completion Date provided that during such period the Sellers shall
be entitled to enter into a hedging transaction with the object or
effect of reducing their risk with respect to any of the Consideration
Shares issued to them in accordance with U.S securities laws.
10 INDEMNITY
The Warrantors shall indemnify and hold harmless the Buyer (acting for
itself and as trustee for the Company) against all losses, damages,
charges, fines, costs, expenses, judgments and settlement amounts
incurred directly or indirectly by the Buyer or the Company (including
without limitation legal and other professional fees and expenses) in
connection with or as a consequence of a failure by the Company prior to
Completion to provide a pension for or payment of a contribution towards
pension benefits for an employee or former employee because of that
employee or former employee's part-time status or the number of hours
worked by that individual per week.
11 ANNOUNCEMENTS
11.1 No announcement or public statement concerning the existence, subject
matter or any term of this Agreement shall be made by or on behalf of
any party without the prior written approval of the other such approval
not to be unreasonably withheld or delayed.
11.2 This clause shall not affect any announcement or public statement by any
party required by law, a securities exchange or regulatory or
governmental body to which such party is subject, including the rules of
a stock exchange, in which case the party concerned shall make all
reasonable attempts to agree the contents of such announcement or
statement with the other parties before it is made.
12 ASSIGNMENT
No party shall be entitled to assign or transfer all or any of its
rights, benefits or obligations under this Agreement except that the
Buyer may assign or transfer its rights under clause 5 to another member
of the Buyer's Group provided that, if the transferee leaves the Buyer's
Group, it shall, prior to such departure, re-assign or re-transfer such
rights or obligations back to a member of the Buyer's Group.
13 RIGHTS OF THIRD PARTIES
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any term of this
Agreement but this does not affect any right or remedy of a third party
which exists or is available apart from the Act.
14 VARIATION
A variation of this Agreement must be signed by or on behalf of each
party.
17
<PAGE> 21
15 WAIVER
A delay in exercising, or failure to exercise, any right or remedy under
this Agreement does not constitute a waiver of such or other rights or
remedies. No single or partial exercise of any right or remedy prevents
further exercise of such or other rights or remedies. The rights, powers
and remedies provided in this Agreement are cumulative and not exclusive
of any rights and remedies provided by law.
16 COSTS
Each party shall pay its own costs resulting from the negotiation,
preparation and implementation of this Agreement.
17 NO RECOURSE
No past, present or future director, officer, employee, member,
shareholder, incorporator, partner, or affiliate of the Buyer or the
Sellers (except to the extent bound by the terms of this Agreement)
shall have any liability for any obligations of the Buyer or the Sellers
under this Agreement or for any claim based on such obligations.
18 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which when executed and delivered constitutes an original of this
Agreement, but all the counterparts shall together constitute one and
the same agreement. No counterpart shall be effective until each party
has executed at least one counterpart.
19 NOTICES
19.1 A notice or other communication given under this Agreement shall be in
writing and shall be served by delivering it to the party due to receive
it at the address set out in this clause 19 and shall be deemed to have
been delivered in accordance with this clause 19.
19.2 The parties' addresses for the purposes of this Agreement are:
for the Buyer Getty Images Inc.
701 North 34th Street
Suite 400
Seattle
Washington 98103, USA
For the attention of: Nick Evans-Lombe
for the Seller Mark Cass and Wilfred Cass
At the addresses set out in schedule 1.
or such other address as the relevant party notifies to the other
[party/ies].
19.3 A notice so addressed shall be deemed to have been received:
19.3.1 if personally delivered, at the time delivery;
18
<PAGE> 22
19.3.2 if sent by pre-paid recorded delivery or registered post, 48
hours after the date of posting; and
19.3.3 if sent by registered air-mail, five days after the date of
posting.
19.4 For the avoidance of doubt, any notice given under this Agreement shall
not be validly served if sent by e-mail or by fax.
20 GOVERNING LAW
This Agreement is governed by, and shall be construed in accordance
with, English law.
21 JURISDICTION
Each of the parties irrevocably agrees that the courts of England have
exclusive jurisdiction to decide and to settle any dispute or claim
arising out of or in connection with this Agreement.
22 ENTIRE AGREEMENT
22.1 This Agreement constitutes the entire agreement and supersedes any
previous agreements between the parties relating to the subject matter
of this Agreement.
22.2 The Warrantors are not liable to the Buyer (in equity, contract or tort,
under the Misrepresentation Act 1967 or in any other way) for a
representation that is not set out in this Agreement.
22.3 Nothing in this clause 22 shall have the effect of limiting or
restricting any liability of the Warrantors arising as a result of any
fraud, wilful misconduct or wilful concealment.
19
<PAGE> 23
SCHEDULE 1
THE SELLERS
<TABLE>
<CAPTION>
AGREED SHARE PRICE $41-77 $1.4055 = POUND STERLING1
------------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS NO. OF SHARES NO. OF NO. OF NO. OF VALUE OF CASH TOTAL
CONSIDERATION CONSIDERATION CONSIDERATION LOAN
SHARES SHARES SHARES SUBJECT NOTES
TO THE ESCROW
AGREEMENT
1 2 3 4 5 6 7 8
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark Neil Cass 25 "B" convertible Pound Sterling Pound Sterling Pound Pound
279 Central Park West preferred ordinary 736,406 736,406 Sterling Sterling
Apartment 10A shares of Pound 2,209,219 2,945,625
New York 10024 Sterling1 each
USA Shares 24,779 Shares 24,779 $3,105,057
------------------------------------------------------------------------------------------------------------------------------------
Wilfred Richard Cass 44 "A" convertible Pound Sterling Pound Sterling Pound Sterling Pound Pound
Hathill Copse preferred ordinary 3,682,031 2,936,932 745,099 Sterling Sterling
Goodwood shares of Pound 1,502,269 5,184,300
Chichester Sterling1 each $2,111,439
West Sussex Shares 123,895 Shares 98,823 Shares 25,072
PO18 0QP
------------------------------------------------------------------------------------------------------------------------------------
Trustees of the 25 "C" convertible Pound Sterling Pound Sterling Pound Sterling Pound
W.R. Cass preferred ordinary 2,945,625 2,200,526 745,099 Sterling
Discretionary shares of Pound 2,945,625
Settlement Sterling1 each Shares 99,116 Shares 74,044 Shares 25,072
------------------------------------------------------------------------------------------------------------------------------------
Eric & Wilfred Cass 6 "A" convertible Pound Pound
as trustees of the preferred ordinary Sterling Sterling
Hat Hill shares 706,950 706,950
Sculpture Foundation
------------------------------------------------------------------------------------------------------------------------------------
Pound Pound Pound Pound Pound Pound
TOTAL STERLING Sterling Sterling Sterling Sterling Sterling Sterling
7,364,062 5,873,864 1,490,198 3,711,488 706,950 11,782,500
------------------------------------------------------------------------------------------------------------------------------------
Total of
Columns 3,
6 & 7
------------
</TABLE>
x = average Getty share price in $
20
<PAGE> 24
SCHEDULE 2
INFORMATION ABOUT THE COMPANY
PART A
THE COMPANY
<TABLE>
<S> <C>
1 Registered number: 3239434
2 Date of incorporation: 19 August 1996
3 Place of incorporation: United Kingdom
4 Registered office address: 17 Conway Street, Fitzrovia, London W1P 6EE
5 Type of company: Private
6 Authorised share capital:
(a) amount: Pound Sterling10,000
(b) number and class of shares: 9,850 Ordinary shares of Pound Sterling1 each;
50 "A" convertible preferred ordinary shares of
Pound Sterling1 each; 25 "B" convertible
preferred ordinary shares of Pound Sterling1
each; 25 "C" convertible preferred ordinary
shares of Pound Sterling1 each; and 50
preference shares of Pound Sterling each 7
Issued share capital:
(a) amount: Pound Sterling100
(b) number and class of shares: 50 "A" convertible preferred ordinary shares of
Pound Sterling1 each; 25 "B" convertible
preferred ordinary shares of Pound Sterling1
each; and 25 "C" convertible preferred ordinary
shares of Pound Sterling1 each 8 Directors: Mark
Neil Cass and Wilfred Richard Cass
9 Secretary: Rubina Marshall
</TABLE>
21
<PAGE> 25
<TABLE>
<S> <C>
10 Accounting reference date: 31 December
11 Auditors: Rawlinson & Hunter
12 Bankers: Barclays Bank plc
13 Tax residence: UK
14 VAT registration no.: GB340242894
15 Bank accounts: Ascot Branch
19 High Street
Ascot
Berks
SL5 7JG
</TABLE>
<TABLE>
<CAPTION>
A/C NAME: A/C NAME: SORT CODE:
--------- --------- ----------
<S> <C> <C> <C>
Business Current 20937991 20-02-53
A/C
Business Premium 50349364 20-02-53
A/C
Currency Call 56099299 20-02-53
Deposit A/C US$
Business Premium 50541168 20-02-53
A/C
(Alladvantage.com
Ltd)
Treasury Deposit 87644699
A/C
47/48 St. Stephen's Green
Dublin 2
Ireland
A/C NAME: A/C NO: SORT CODE:
--------- -------- ----------
Corporate Banking 38713401 99-02-12
Ireland IRY
16 Charges: Alladvantage.com for rent deposit of Pound
Sterling40,000
</TABLE>
22
<PAGE> 26
SCHEDULE 3
WARRANTIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
NO. SUBJECT MATTER
--- --------------
<S> <C>
1 Definitions
2 Capacity and Authority
3 Information
4 Shares and Subsidiary Undertakings
5 Accounts
6 Management Accounts
7 Images
8 Assets
9 Intellectual Property
10 Insurance
11 Real Property
12 Environmental Matters
13 Agreements
14 Terms of Trade and Business
15 Effect of Sale
16 Employees
17 Pensions and Other Benefits
18 Liabilities
19 Permits
20 Insolvency, Winding up etc.
21 Competition
22 Litigation and Compliance with Law
23 Insider Agreements
24 Constitution, Registers and Returns
25 Brokerage or Commissions
</TABLE>
23
<PAGE> 27
1 In this Schedule:
"COMPANY" means Cass & Cass Limited;
"COMPANY IMAGES" means together the TIB Originated Franchised Images, the
Company Originated Franchised Images and the LDA Images;
"COMPANY ORIGINATED FRANCHISED IMAGES" means those Images that the Company has
obtained or commissioned from photographers or other third parties and were
dealt with by the Company subject to the TIB Images Licence Agreement;
"ENVIRONMENT" means:
(a) land, including, without limitation, surface land, sub-surface strata,
sea bed and river bed under water (as defined in paragraph (b)) and
natural and man-made structures;
(b) water, including, without limitation, coastal and inland waters, surface
waters, ground waters, water in drains and sewer controlled waters; and
(c) air, including, without limitation, air inside buildings and other
natural and man-made structures above or below ground;
"ENVIRONMENTAL LAW" means applicable law (whether civil, criminal or
administrative), common law, statute, subordinate legislation, treaty,
regulation, directive, decision, by-law, circular, code, order, notice, demand,
decree, injunction, resolution, judgment or resolution of a government,
quasi-government, supranational, federal, state or local government, statutory,
administrative or regulatory body, court, agency or association in any part of
the world with regard to the pollution or protection of the Environment, harm to
or the protection of the health of humans, animals or plants including, without
limitation, laws relating to:
(a) public and workers' health and safety;
(b) noise, vibration or radiation;
(c) the release or discharge of industrial, radioactive, dangerous, toxic or
hazardous substances, waste (whether in solid, semi-solid or liquid form
or in the form of a gas or vapour) and genetically modified organisms
into the Environment; and
(d) the generation, manufacture, processing, use, treatment, storage,
distribution, disposal, transport or handling of any of the substances,
waste and organisms referred to in paragraph (c);
"ENVIRONMENTAL PERMIT" means any permit, licence, authorisation, consent or
other approval required under or in relation to any Environmental Law;
"ENVIRONMENTAL PROCEEDING" means a civil, criminal, arbitration, administrative
or other proceeding concerning any Environmental Law and/or the pollution or
protection of the Environment (including the disposal of waste) or harm to or
the protection of the health of humans, animals or plants;
"HAZARDOUS SUBSTANCE" means a natural or artificial substance, organism,
preparation or article which, if present, generated, manufactured, processed,
used, treated, stored, distributed, disposed of, transported or handled (alone
or combined with another substance, preparation or article) is
24
<PAGE> 28
capable of causing harm to the Environment or a living organism, or which is
prohibited or restricted under Environmental Law;
"LETTING" an underlease dated 20 June 2000 between (1) the Company (2)
Alladvantage.com Limited of the second and third floors of 17 Conway Street
London W1;
"LDA IMAGES" means those Images that the Company has acquired licencing rights
to (not being TIB Originated Franchised Images or Company Franchised Images)
including without limitation Images in respect of which rights have been
acquired pursuant to any of the photographer agreements as entered into by the
Company in furtherance of the M. Loco Agreement; and
"TIB ORIGINATED FRANCHISED IMAGES" means those Images that TIB has obtained or
commissioned from photographers or other third parties that were dealt with by
the Company subject to the TIB Images Licence Agreement.
2 CAPACITY AND AUTHORITY
2.1 INCORPORATION AND EXISTENCE
The Company is a private limited company incorporated under English law
and has been in continuous existence since incorporation.
2.2 RIGHT, POWER, AUTHORITY AND ACTION
2.2.1 The Sellers have the right, power and authority, and have taken
all action necessary, to execute, deliver and exercise their
rights, and perform their obligations, under this Agreement and
each document to be executed at or before Completion.
2.2.2 The Company has the right, power and authority to conduct its
business as conducted at the date of this Agreement.
2.3 BINDING AGREEMENTS
The Sellers' obligations under this Agreement are enforceable in
accordance with their terms.
3 INFORMATION
3.1 GENERAL
The information in Schedule 2 is true, accurate and not misleading.
3.2 THE AGREEMENT AND THE DISCLOSURE LETTER
The information set out in this Agreement and the Disclosure Letter
(including each annex to the Disclosure Letter) is true, accurate and
not misleading.
3.3 All other information listed in the Disclosure Letter was when given and
is at the date hereof true and accurate in all respects.
25
<PAGE> 29
4 SHARES AND SUBSIDIARY UNDERTAKINGS
4.1 THE SHARES
4.1.1 The Sellers are the sole legal owners of the Shares.
4.1.2 The Shares together with the Hat Hill Trustees Shares comprise
the whole of the Company's issued and allotted share capital,
have been properly issued and are fully paid or credited as
fully paid.
4.1.3 There is no Security Interest, and there is no agreement,
arrangement or obligation to create or give a Security Interest,
in relation to any of the Shares or unissued shares in the
capital of the Company. No person has claimed to be entitled to
a Security Interest in relation to any of the Shares.
4.1.4 Other than this Agreement, there is no agreement, arrangement or
obligation requiring the creation, allotment, issue, transfer,
redemption or repayment of, or the grant to a person of the
right (conditional or not) to require the allotment, issue,
transfer, redemption or repayment of, a share in the capital of
the Company (including, without limitation, an option or right
of pre-emption or conversion).
4.2 SUBSIDIARY UNDERTAKINGS
4.2.1 The Company does not have, and has never had, a subsidiary
undertaking.
4.2.2 The Company has no interest in, and has not agreed to acquire an
interest in, a corporate body.
5 ACCOUNTS
5.1 The Accounts of the Company give a true and fair view of the state of
affairs of the Company as at the Accounts Date and of its results for
the Financial Year ended on the Accounts Date.
5.2 Without limiting the generality of paragraph 5.1:
5.2.1 the Accounts of the Company either make full provision for or
disclose all liabilities (whether actual, contingent or disputed
and including financial lease commitments and pension
liabilities), all outstanding capital commitments and all bad or
doubtful debts of the Company as at the Accounts Date, in each
case in accordance with generally accepted accounting
principles;
5.2.2 the Accounts were prepared under the historical convention,
complied with the requirements of all relevant laws then in
force and with all statements of standard accounting practice
(or financial reporting standards) and generally accepted
accounting principles of the United Kingdom then in force;
5.2.3 any redundant or obsolete stock has been wholly written off, and
in no case did the value attributed to any stock included in the
Last Accounts exceed the lower of cost and net realisable value
as at the Accounts Date;
5.2.4 the basis of depreciation and amortisation adopted in the
Accounts of the Company were the same as those adopted in the
Accounts of the Company for
26
<PAGE> 30
the two financial years preceding the financial year ended on
the Last Accounts Date;
5.2.5 the rate of depreciation adopted by the Company in the Accounts
was sufficient for each of the fixed assets of the Company to be
written down to nil by the end of its useful life;
5.2.6 except as stated in its Accounts, no changes in the accounting
policies were made by the Company in any of its financial years
ended on the Last Accounts Date;
5.2.7 the results shown by the Accounts were not (except as therein
disclosed) affected by any extraordinary or exceptional item or
by any other factor rendering such results for all or any of
such periods unusually high or low.
5.3 POSITION SINCE LAST ACCOUNTS DATE
Since the Last Accounts Date, there has been no material adverse change
in the financial or trading position of the Company, save to the extent
that the material adverse change arose as a direct result of the conduct
of a member of the Buyer's Group, and no event, fact or matter, so far
as the Sellers are aware, has occurred which is likely to give rise to
any such change.
5.3.1 Since the Last Accounts Date:
(a) the business of the Company has been carried on in the
ordinary and usual course consistent with past practices
and the Company has not made or agreed to make any
payment other than routine payments in the ordinary and
usual course of trading;
(b) no dividend or other distribution (within the meaning of
section 209, 210, or 418 of the Taxes Act) has been
declared, paid or made by the Company (except for any
dividends provided for in the Accounts of the Company);
(c) no share or loan capital has been allotted or issued or
agreed to be allotted or issued by Company;
(d) there has been no material change in the level of
borrowing or in the working capital requirements of the
Company;
(e) all transactions between the Company and any of the
Sellers have been on arm's length terms;
(f) no contract, liability or commitment (whether in respect
of capital expenditure or otherwise) has been entered
into by the Company which is of a long term or unusual
nature or which involved or could involve an obligation
of a material nature or magnitude (a liability for
expenditure in excess of Pound Sterling30,000 being
included as material for this purpose);
(g) the Company has not (whether in the ordinary and usual
course of business or otherwise) acquired or disposed
of, or agreed to acquire or
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dispose of, any business or any asset having a value in
excess of Pound Sterling10,000;
(h) no debtor has been released by the Company on terms that
it pays less than the book value of its debt and no debt
in excess of Pound Sterling5,000 owing to the Company
has been deferred, subordinated or written off or has
proved to any extent irrecoverable;
(i) no change has been made in terms of employment,
including pension fund commitments, by the Company
(other than those required by law) which could increase
the total staff costs of the Group by more than Pound
Sterling10,000 per annum or the remuneration of any one
director or employee by more than Pound Sterling5,000
per annum;
(j) there has been no material increase or decrease in the
levels of debtors or creditors or in the average
collection or payment periods for the debtors and
creditors respectively;
(k) the Company has not repaid any borrowing or indebtedness
in advance of its stated maturity;
(l) there has been no material reduction in the cash
balances of the Company;
(m) no resolution of the members of the Company has been
passed whether in general meeting or otherwise (other
than resolutions relating to the routine business of
annual general meetings);
(n) the business of the Company has not been affected by any
abnormal factor not affecting to a similar extent
generally all companies carrying on similar businesses
in the United Kingdom.
5.4 ACCOUNTING AND OTHER RECORDS
5.4.1 The statutory books and books of account of the Company:
(a) are up-to-date and have been maintained in accordance
with Section 223 of the Companies Act and UK generally
accepted accounting principles on a proper and
consistent basis;
(b) comprise complete and accurate records of all
information required to be recorded therein;
(c) are in its possession or under its control together with
all documents of title and executed copies of all
existing agreements to which the Company is a party.
5.4.2 All accounts, documents and returns required by law to be
delivered or made by the Company to the Registrar of Companies
or any other authority have been duly and correctly delivered or
made.
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\
5.5 ACCOUNTING REFERENCE DATE
5.5.1 The accounting reference date of the Company under section 224
of the Companies Act is, and during the last two years always
has been, the date specified in schedule 2 in respect of the
Company.
6 MANAGEMENT ACCOUNTS
The Management Accounts:
6.1 have been prepared on a proper, reasonable and consistent basis, have
been carefully reviewed by the Sellers and are believed by the Sellers
to be fair and reasonable;
6.2 do no materially misrepresent the state of affairs of the Company as at
and for the period ended on the date to which they were prepared; and
6.3 adequately set out all assets and make full provision for (or contain a
note in accordance with good accounting practice respectively) all
liabilities (whether actual, disputed, deferred or contingent,
liquidated or unliquidated) (including Taxation and bad or doubtful
debts) and all outstanding capital commitments of the Company as at the
date to which they were prepared.
6.4 GENERAL
Since the Management Accounts Date:
6.4.1 the Company's business has been operated in the usual way so as
to maintain it as a going concern;
6.4.2 there has been no adverse change in the financial or trading
position of the Company;
6.4.3 no material change has occurred in the assets and liabilities
shown in the Management Accounts and there has been no reduction
in the value of the net tangible assets of the Company on the
basis of the valuations used in the Management Accounts;
6.4.4 the Company has not, other than in the usual course of its
business:
(a) acquired or disposed of, or agreed to acquire or dispose
of, an asset; or
(b) assumed or incurred, or agreed to assume or incur, a
liability, obligation or expense (actual or contingent);
6.4.5 the Company has not:
(a) made, or agreed to make, capital expenditure exceeding
in total Pound Sterling10,000; or
(b) incurred, or agreed to incur, a commitment or
commitments involving capital expenditure exceeding in
total Pound Sterling10,000;
6.4.6 the Company's business has not been materially and adversely
affected by the termination of, or a change in the terms of, an
agreement or by the loss of a customer or supplier and to the
best of the Seller's knowledge, information and belief, no fact
or circumstance exists which might have a material and adverse
effect on the Company's business;
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6.4.7 the Company has not declared, paid or made a dividend or
distribution;
6.4.8 the Company has not changed its accounting reference period;
6.4.9 no resolution of the shareholders of the Company has been
passed;
6.4.10 the Company has not created, allotted, issued, acquired, repaid
or redeemed share or loan capital or made an agreement or
arrangement or undertaken an obligation to do any of those
things; and
6.4.11 the Company has both paid its creditors and collected its debts
in the normal and usual course.
7 IMAGES
7.1 The Company does not own any Images and the Company Images constitute
all of the Images used or held for use by the Company.
7.2 So far as the Sellers are aware the Company has not granted any license,
sublicense or other right to any person with respect to LDA Images,
Company Originated Franchised Images or, TIB Originated Franchised
Images that would constitute a breach of any agreement or license
pertaining to such Company Images.
7.3 The Company has not done or failed to do anything in relation to the TIB
Originated Franchised Images or the Company Originated Franchised Images
that would result in the Company having any liability under the TIB
Images Licence Agreement for any loss or damages to such images. The
Company has also not done or failed to do anything in relation to TIB
Footage (as defined in the TIB Footage Licence Agreement) that would
lead to the Company having any liability under the TIB Footage Licence
Agreement for any loss of or damage to the TIB Footage.
7.4 The Company has not whether directly or indirectly lost or damaged any
LDA Images. For the avoidance of doubt it is accepted by the Buyer that
neither the Company nor the Sellers are responsible for the loss of any
LDA Images whilst in the possession or control of a member of the Buyers
Group.
7.5 So far as the Sellers are aware, the display, sale, reproduction,
electronic transmission, performance, marketing, distribution and
sublicensing of the LDA Images by the Company does not infringe upon the
Intellectual Property right, privacy rights or right of publicity of any
third party. The display, sale, reproduction, electronic transmission,
performance, marketing, distribution and sublicensing of the LDA Images
by the Company prior to Completion did not constitute a breach of any
agreement or license to which the Company is a party.
7.6 Except as set out in the Disclosure Letter, no claims have been made and
not disposed of, or are pending or, to the Sellers knowledge, threatened
against the Company or, to the Sellers knowledge, against any customer
of the Company or any third party licensor or licensee of Company
Images: (i) based upon or challenging or seeking to deny or restrict the
display, sale, reproduction, electronic transmission, performance,
marketing,
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distribution or sublicensing by the Company of any of the Company
Images; (ii) alleging that the sale, reproduction, distribution or
sublicensing of the Company Images does or may infringe upon the
Intellectual Property rights, privacy rights, or right of publicity of
any third party; (iii) challenging the Company's rights to the Company
Images (iv) alleging that any services provided by, processes used by or
Images offered by the Company infringe upon or misappropriate any
Intellectual Property right of any third party. Except as set forth in
the Disclosure Letter, within the past 12 months no person has requested
indemnification from the Company based on the proper use of Company
Image.
7.7 The consummation of the transactions contemplated by this Agreement will
not result in the termination or impairment of the rights of the
Company, as they exist on the date hereof or on the Completion Date, to
sell, reproduce, market, transmit electronically, perform, distribute or
sublicense any of the Company Originated Franchised Images or the LDA
Images.
7.8 Prior to any display, sale, marketing, electronic transmission,
performance, reproduction, distribution or sublicensing of any Company
Originated Franchised Images or the LDA Images, prior to Completion
either: (i) the Company has obtained in writing all such releases and/or
other third party consents or authorisations necessary for such display,
sale, marketing, electronic transmission, performance, reproduction,
distribution or sublicensing; or (ii) the artist providing such Company
Originated Franchised Images or LDA Images has represented and warranted
to the Company that he has obtained such releases and/or other third
party consents or authorisations. Copies of such releases and/or other
third party consents or authorisations are either kept by the Company at
its offices or are required to be provided to the Company upon request
pursuant to the Company's agreements with the artists providing such
Company Originated Franchised Images or LDA Images. Except as set forth
in the Disclosure Letter, the Company has not, prior to Completion,
entered into any contract for the storage and handling of Images.
7.9 With respect to each license or agreement by which the Company has
obtained the right to display, sell, reproduce, market, transmit
electronically, perform, distribute or sublicense the LDA Images or by
which the Company has granted to any third party the right to display,
sell, reproduce, market, transmit electronically, perform or distribute
any LDA Images (except for those that expire by their terms prior to
Completion):
(a) such license or agreement is legal, valid, binding and
enforceable and in full force and effect and, together with the
related invoices, represents the entire agreement between the
parties thereto with respect to the subject matter thereof;
(b) such license or agreement will not cease to be legal, valid,
binding and enforceable and in full force and effect on terms
identical to those currently in effect as a result of the
consummation of the transaction contemplated by this Agreement;
(c) the Company has not: (A) received any notice of termination or
cancellation under such license or agreement, and no party
thereto has any right of termination or cancellation thereunder
except in accordance with its terms; (B) received any notice of
a breach or default under such license or agreement which breach
or default has not been cured; and (C) granted to any other
person any rights, adverse or otherwise, under such license or
agreement; and
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(d) neither the Company nor, to the Sellers knowledge, any other
party to such license or agreement is in breach or default
thereof in any material respect and, to the Sellers knowledge,
no event has occurred that, with notice or lapse of time would
constitute such a breach or default or permit termination,
modification or acceleration under such license or agreement.
7.10 The Disclosure Letter sets out each contract providing the Company with
the right to display, reproduce, distribute or sublicense the use of any
Image owned or controlled by a third party that has, since 1 January
1999 been terminated or revoked by either the Company or the third
party.
8 ASSETS
8.1 TITLE AND CONDITION
8.1.1 Each asset used by the Company or which is in the reputed
ownership of the Company is:
(a) legally and beneficially owned solely by the Company
free from any Security Interest; and
(b) where capable of possession, in the possession or under
the control of the Company.
8.1.2 The Company owns or has the right to use each asset necessary
for the effective operation of its business.
8.1.3 All equipment owned, possessed or used by the Company, having
regard to its age, is in good working order.
8.1.4 The Company's asset registers comprise a complete and accurate
record of all the machinery, equipment, vehicles and other
assets owned, possessed or used by it.
8.1.5 Maintenance contracts are in force for each asset of the Company
which it is normal to have maintained by independent or
specialist contractors and for each asset which the Company is
obliged to maintain or repair under a leasing or similar
agreement. Those assets have been regularly maintained to a good
technical standard and in accordance with:
(a) safety regulations required to be observed in relation
to them; and
(b) the provisions of any applicable leasing or similar
agreement.
8.2 HIRE PURCHASE AND LEASED ASSETS
The Company is not a party to, nor is liable under, a lease or hire,
hire purchase, credit sale or conditional sale agreement.
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8.3 DEBTORS
8.3.1 No debt shown in the Management Accounts or the Company's
accounting records is overdue by more than 6 weeks or is the
subject of an arrangement other than of the kind, particulars of
which are set out in the Disclosure Letter.
8.3.2 The Company has not released a debt shown in the Management
Accounts or its accounting records so that the debtor has paid
or will pay less than the debt's book value. None of the debts
shown in the Management Accounts or the Company's accounting
records has been deferred, subordinated or written off or become
irrecoverable to any extent.
8.4 EFFECT ON AGREEMENTS
To the best of the Sellers knowledge, information and belief, the
introduction of the euro has not caused, will not cause and is not
likely to cause, any agreement, arrangement or obligation to which the
Company is a party to terminate or to be capable of termination and has
not altered, will not alter and is not likely to alter the terms of or
excuse or discharge performance of such an agreement.
8.5 TRAINING
The Company has provided training sufficient to ensure that all relevant
employees are capable of effectively operating all computer software and
systems that have been produced or adapted to allow for reference to or
use of the euro.
9 INTELLECTUAL PROPERTY
9.1 Other than as specified under clauses 7, 9.11, 9.12.4 and 13.8 of these
Warranties, the Company does not own or use any Intellectual Property.
9.2 Any Intellectual Property owned by the Company is owned solely by the
Company and is not subject to any security interest (of whatever nature)
and the Company has not granted any such interest over any Intellectual
Property owned by the Company.
9.3 So far as the Warrantors are aware, none of the operations of the
Company infringe, have infringed, or are likely to infringe, any rights
held by any third party or involve the unauthorised use of confidential
information disclosed to the Company in circumstances which might
entitle a third party to make a claim against the Company.
9.4 No claim has been made by any third party which alleges any infringing
act or process which would fall within clause 9.3 of these Warranties or
which otherwise disputes the right of the Company to use any
Intellectual Property relating to its business and the Warrantors are
not aware of any circumstances (including any act or omission to act)
likely to give rise to such a claim.
9.5 There has not existed nor does there exist any actual or threatened
infringement by any third party of any Intellectual Property held by the
Company (including misuse of confidential information) or any event
likely to constitute such an infringement nor has the Company acquiesced
in the unauthorised use by any third party of any such Intellectual
Property, nor is there any actual or threatened infringement by any
third party of any Intellectual Property used under licence by the
Company which is likely to affect the business of the Company.
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9.6 None of the Warrantors has any interest or rights in or to receive any
payment or right in respect of any Intellectual Property used by the
Company (including for the avoidance of doubt all computer software
designed, written, programmed or developed by the Company, the
Warrantors or any employees or ex-employees of the Company and used by
the Company).
9.7 No claims have been made or are threatened by employees or ex-employees
to receive any payment or right in respect of any Intellectual Property
used by the Company.
9.8 9.8.1 Other than in relation to the Company Images, no material
licences have been granted to or by the Company in respect of
any Intellectual Property owned or used by it, including without
limitation licences with internet service providers and internet
portals.
9.8.2 The Company is not in material default under any licence,
sub-licence or assignment granted to or by it in respect of any
Intellectual Property owned or used by it.
9.9 No material Intellectual Property owned or used by the Company and no
licence of Intellectual Property of which the Company has the benefit
will be lost, or rendered liable to any right of termination or
cessation by any third party, by virtue of the performance of the terms
of this Agreement.
9.10 Where information of a confidential nature has been developed or
acquired by the Company for the purposes of its business in the two year
period prior to the date of this Agreement, such information (except
insofar as it has fallen into the public domain through no fault of the
Company) has been kept strictly confidential and has not been disclosed
otherwise than subject to an obligation of confidentiality being imposed
on the person to whom the information was disclosed. The Warrantors are
not aware of any breach of such confidentiality obligations by any third
party.
9.11 9.11.1 The Disclosure Letter sets out a true and complete list of all
computer software developed in whole or in part by or on behalf
of the Company including such developed computer software and
databases that are operated or used by the Company on its web
sites or used by the Company in connection with processing
customer orders, storing customer information or storing and
archiving Images.
9.11.2 All the accounting records and systems (including but not
limited to computerised accounting systems and the software and
databases referred to in clause 9.11.1 of these Warranties) of
the Company are recorded, stored, maintained or operated or
otherwise held by the Company and are not wholly or partly
dependent on any facilities or systems which are not under the
exclusive ownership or control of the Company.
9.11.3 The Company owns or is licensed to use all software necessary to
enable it to continue to use its computerised records for the
foreseeable future in the same manner in which they have been
used prior to the date of this Agreement and does not share any
user rights in respect of such software with any other person.
9.11.4 All material software and hardware used by the Company is
covered by a maintenance agreement which, so far as the
Warrantors are aware, is fully
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enforceable and the terms of all such maintenance agreements are
contained in the Disclosure Letter;
9.11.5 Neither the hardware nor the software owned and/or used by the
Company has been affected by any defects or faults which have
caused any material interruption to the Company's business at
any time during the 12 months prior to the date of this
Agreement;
9.12 9.12.1 The Company does not use or apply and has not for the period of
two years ending the date hereof used or applied any material
unregistered trade or service marks, logos, device marks or
designs in relation to any goods or services which the Company
makes or provides.
9.12.2 The Company does not have and has never had any applications for
registration of trade or service marks.
9.12.3 The Company does not own, licence or use and has never owned,
licensed or used any domain name in connection with the business
of the Company.
9.12.4 The Company has only traded under the names set out below and
has not traded under any other names (besides its own name):
(a) The Image Bank UK;
(b) Infocus International.
9.13 9.13.1 The Company is entitled under licence or otherwise to use all
Intellectual Property which it uses in connection with, and
which is material to, the business of the Company.
9.13.2 So far as the Warrantors are aware, no third party has the right
to prevent the Company using the Intellectual Property referred
to in clause 9.13.1 of these Warranties.
9.14 The Company has not received any notice or has been engaged in any
correspondence with the Data Protection Registrar relating directly or
indirectly to the activities of that company or the Group and its
compliance with the Data Protection Act 1984 and the Data Protection Act
1998 (to the extent applicable). The Company has taken all necessary
steps to comply with and is in full compliance with the provisions of
the Data Protection Act 1984 and the Data Protection Act 1998 (to the
extent applicable) and the Company has not received any notice relating
to subject access rights under the Data Protection Act 1984 and the Data
Protection Act 1998 (to the extent applicable).
10 INSURANCE
10.1 POLICIES
The Disclosure Letter:
10.1.1 contains a list of each current insurance and indemnity policy
in respect of which the Company has an interest (including any
active historic policies which provide cover on a losses
occurring basis) (together the "POLICIES");
10.1.2 sets out, in relation to each of the Policies, the following
information:
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(a) name of insured(s);
(b) name of insurer(s);
(c) period of cover;
(d) classes of risks covered;
(e) basis of cover (ie. claims made or losses occurring);
(f) deductible (amount of deductible and details of whether
it is applied on (i) a per "cause" or "event" basis,
and/or (ii) an aggregate basis);
(g) any applicable limits (including any per "cause" or
"event" limits and any aggregate limits);
(h) the premium payable in respect of the policy;
(i) all exclusions contained in the policy; and
(j) any relevant conditions or warranties which may affect
the availability of cover under the policy.
10.2 STATUS OF THE POLICIES
10.2.1 Each of the Policies is valid and enforceable and is not void or
voidable.
10.2.2 The Company has not done anything or omitted to do anything
which might:
(a) make any of the Policies void or voidable; or
(b) prejudice the ability to effect insurance on the
same or better terms in the future.
10.2.3 No insurer under any of the Policies has disputed, or given any
indication that they intend to dispute, the validity of any of
the Policies on any grounds.
10.2.4 To the best of the Sellers knowledge, information and belief,
there is nothing which could:
(a) vitiate any of the Policies; or
(b) prejudice the ability to effect insurance on the same or
better terms in the future.
10.3 CLAIMS
10.3.1 No claims have been made including without limitation claims in
relation to lost, stolen or damaged Images or model or property
consents without releases, no claim is outstanding and no fact
or circumstance exists which might give rise to a claim under
any of the Policies.
10.3.2 No event, act or omission has occurred which requires
notification under any of the Policies.
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10.3.3 None of the insurers under any of the Policies has refused, or
given any indication that it intends to refuse, indemnity in
whole or in part in respect of any claims under the Policies.
10.3.4 Nothing has been done or omitted to be done, and there is
nothing, which might entitle the insurers under any of the
Policies to refuse indemnity in whole or in part in respect of
any claims under the Policies.
10.4 PREMIUMS
10.4.1 All premiums which are due under the Policies have been paid.
10.4.2 The Company has not done anything or omitted to do anything, and
there is nothing, which might result in an increase in the
premium payable under any of the Policies as at the Completion
Date.
11 REAL PROPERTY
11.1 GENERAL
ll.1.1 The Property is all the immovable properties owned, occupied or
used by the Company or in respect of which the Company has any
estate, interest, right or liability (whether contingent,
secondary or otherwise).
11.1.2 In respect of the properties listed in Part B(ii) of Schedule 5,
warranties under clauses 11 to 12.4 shall not apply. In
addition, the Warrantors confirm that as regards the property at
Upper Mount Street, Dublin, the terms of occupation are
substantially similar to those appearing on the lease disclosed,
and as regard the property at 57 Melville Street, Edinburgh, the
terms of occupation are the terms appearing in the lease as
disclosed.
11.2 TITLE
11.2.1 The Company is solely entitled at law and in equity to the
estate of the Property indicated in schedule 5, and has a good
and marketable title to it.
11.2.2 The title documents necessary to prove the Company's title to
the Property are in the Company's possession and control have
been properly stamped and are originals.
11.2.3 There is no circumstance which could render any transaction
affecting the Company's title to the Property liable to be set
aside under the Insolvency Act 1986.
11.3 ENCUMBRANCES AND ADVERSE INTERESTS
11.3.1 There is no mortgage, charge or lien (whether legal or
equitable, fixed or floating), or other right in the nature of
security over any Property or the title documents, nor any
agreement or commitment to create any of the same.
11.3.2 There is no outstanding agreement for sale, estate contract,
option or right of pre-emption affecting any Property.
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11.3.3 So far as the Sellers are aware there is no covenant,
restriction, stipulation or other encumbrance affecting any
Property which is of a material nature.
11.3.4 The Property is not subject to any of the matters referred to in
section 70(1) of the Land Registration Act 1925.
11.3.5 So far as the Sellers are aware there is no matter, event or
thing which would be revealed by the local land charge search
affecting any Property which has or could have a material affect
on the use of the Property for the current use or under which
any money is to be paid or may have to be paid by the Company or
any successor in title.
11.3.6 So far as the Sellers are aware, all covenants, restrictions,
stipulations and other encumbrances affecting the Property have
been strictly performed and no notice of any alleged breach has
been received by the Company.
11.4 OCCUPATION
11.4.1 The Company holds the Property subject to the Letting but
otherwise is in physical possession and actual occupation of the
whole of that Property on an exclusive basis and no one is in
adverse possession of any Property.
11.4.2 No right of occupation or possession of any Property has been
granted or agreed to be granted or has been acquired or is in
the course of acquisition except for the rights of occupation
created by the Letting.
11.5 RIGHTS AND SERVICES
11.5.1 So far as the Sellers are aware the Property is served by mains
water, sewerage, electricity and gas, and by telecommunications
and such other services as are necessary for the use of the
Property for the current use.
11.5.2 The Property adjoins a highway maintainable at the public
expense at point of access.
11.5.3 No right or easement is necessary for the full use and enjoyment
of the Property.
11.5.4 The Property enjoys all rights and easements necessary for their
continued use and enjoyment for the current use without any
restriction or limitation
11.6 PLANNING
11.6.1 So far as the Sellers are aware the current use of the Property
is a lawful use under the Planning Acts.
11.6.2 So far as the Sellers are aware all necessary consents under the
Planning Acts, building regulations and bye-laws for the
construction of the Property and all alterations and additions
to them and for the current use of each of them have been
obtained and complied with.
11.6.3 So far as the Sellers are aware no planning permission relating
to the Property has been given subject to any continuing
conditions or on a personal or
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temporary basis (otherwise than by virtue of section 91 or 92 of
the Town and Country Planning Act 1990).
11.6.4 So far as the Sellers are aware no planning permission relating
to the Property remains unimplemented in whole or in part, no
planning permission is the subject of a challenge as to its
validity or has been issued within the three months immediately
before this agreement and no discontinuance order has been
issued in respect of the Property.
11.6.5 So far as the Sellers are aware no application for planning
permission relating to the Property awaits determination and no
planning decision or deemed refusal is the subject of any
appeal.
11.6.6 So far as the Sellers are aware no monetary claim or liability
(whether contingent or otherwise) in respect of the Property
under the Planning Acts is outstanding and no compensation in
respect of the Property has been received under the Planning
Acts which is potentially repayable by virtue of such
legislation.
11.6.7 So far as the Sellers are aware there is no agreement or
planning obligation affecting any Property under sections 38 and
278 of the Highways Act 1980, section 106 of the Town and
Country Planning Act 1990 or section 104 of the Water Industry
Act 1991 or any provision in legislation of a similar nature,
and the Company is not required to enter into any such agreement
or obligation.
11.6.8 The Sellers confirm the Company has not received notices
relating to any proposal for the development of the property or
the construction of any road or other traffic proposal in the
vicinity of the Property (including any proposal relating to any
road or footpath from which access to any Property is gained).
11.7 STATUTORY OBLIGATIONS AND COMPLIANCE
So far as the Sellers are aware all legislation affecting the
Property and its current use has been complied with and there
are no outstanding requirements or recommendations of any
competent authority (including the fire authority), nor any
circumstances which may result in any such requirement or
recommendation being made.
11.8 COMPULSORY PURCHASE
So far as the Sellers are aware no notice, order (whether in draft or
confirmed) or resolution has been issued or made by any competent
authority for the compulsory acquisition of the Property and the Sellers
are not aware of any proposals for or circumstances which could result
in such a notice, order or resolution.
11.9 STATE AND CONDITION
The current state of repair and condition of the Property does not
prevent the Company from carrying on the current use.
11.10 DISPUTES AND NOTICES
So far as the Sellers are aware there is no outstanding litigation,
arbitration, claim, dispute or complaint between the Company or occupier
of the Property and the owner or occupier
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of any adjoining or neighbouring property or which relates to the
Property or its use and the Sellers are not aware of any circumstances
which may give rise to any such claim, dispute or complaint.
11.11 OUTGOINGS
11.11.1 The Property is not subject to the payment of any outgoings
except the rent (including service charge and insurance
premium), uniform business rate, water rates and, sums payable
under the Lease, all of which have been paid when due and none
of which is in dispute.
11.11.2 So far as the Sellers are aware the Property is not affected by
any transitional arrangements or appeal in respect of the
uniform business rate.
11.12 THE LEASE
11.12.1 All necessary consents for the grant of the Lease, satisfactory
evidence of any reversioner's title and of the current rent
reserved, all necessary consents for any dealing with the Lease
and notices of the registration of such dealings have been
obtained and are in the possession of the Company.
11.12.2 The Lease is a head lease and no collateral agreement,
undertaking, waiver or concession has been made or given which
is binding on the current landlord or on the Company or on
their respective successors in title.
11.12.3 The Lease does not contain any unusual or onerous provision nor
any restriction which would prevent or inhibit the Property
being used for the current use.
11.12.4 The Lease contains no option, right of pre-emption or right to
renew, except a right to renew under the Landlord and Tenant
Act 1954.
11.12.5 Except as permitted pursuant to the Deed of Variation, the
Lease contains no right for the landlord or the tenant to end
it before its expiry by effluxion of time (otherwise than in
connection with the landlord's right of re-entry).
11.12.6 The landlord is entitled to elect that supplies made under the
Lease will be standard rated for VAT purposes and increase the
rent accordingly, but the Sellers are not aware that it has
done so.
11.12.7 All moneys due under the Lease have been paid when due and none
has been commuted, waived or paid in advance of the due date.
11.12.8 The Lease is subsisting and there is no subsisting breach of
the terms of the Lease nor any matter which would render the
Lease liable to forfeiture.
11.12.9 So far as the Sellers are aware there is no outstanding breach
of any obligation by the landlord under the Lease.
11.12.10 There is no rent review pending.
11.13 LETTINGS
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11.13.1 The title documents of the Letting include all necessary
consents to it, all necessary consents to and notices of any
dealing with it, copies of any instruments effecting a dealing
with it and satisfactory evidence of the current rent reserved.
11.13.2 No collateral agreement, undertaking, waiver or concession has
been made or given which is binding on the Company or on the
current tenant or their respective successors in title.
11.13.3 So far as the Sellers are aware, the Letting does not contain a
right for the tenant to end the Letting before its expiry by
effluxion of time, nor any right for the tenant to renew or
extend the Letting (including a right to renew under the
Landlord and Tenant Act 1954) and no notice has been given by
any tenant in connection with any such right. 36.13.4 The
Letting permits the landlord to elect that supplies made under
the Letting may be standard rated for VAT purposes and to
increase the rent accordingly. The Company (or the relevant
member of its VAT group) has not so elected.
11.13.5 So far as the Sellers are aware, where the Company or the
relevant member of its VAT group has elected that supplies
under the Letting will be standard rated for VAT purposes, the
election was properly made and was made with the permission,
where required, of HM Customs and Excise and has been duly
notified, where required, to HM Customs and Excise.
11.13.6 All moneys due under the terms of the Lettings have been paid
when due and none has been commuted, waived or paid in advance
of the due date.
11.13.7 There is no outstanding breach of any of the terms of the
Letting by the tenant, and neither the Company nor any
predecessor in title has waived or acquiesced in any such
breach.
11.13.8 There is no rent review pending.
11.13.9 Any rent or other deposit from the tenant under the Letting
which is a company and which contains a charge in favour of the
Company has been duly registered.
11.13.10 There has been no relevant variation of the terms of the
Letting within the meaning of section 18 of the Landlord and
Tenant (Covenants) Act 1995 (LTCA).
11.13.11 The Letting is a new tenancy within the meaning of section 1 of
the LTCA contains a lawful agreement between the landlord and
the tenant that the landlord may as a condition of consent to
an assignment of the tenancy require any tenant which assigns
the tenancy to enter into an authorised guarantee agreement
(within the meaning of section 16 of the LTCA) under which it
will guarantee all the tenant's covenants of the tenancy until
the assignee is released by virtue of the LTCA.
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12 ENVIRONMENTAL MATTERS
12.1 OPERATION OF BUSINESS
The operation of the Company's business does not involve and has never
involved the use, or the release or discharge, of a Hazardous Substance.
12.2 LAND AND OTHER ASSETS
So far as the Sellers are aware no land or other asset owned, occupied,
possessed or used by the Company on the date of this Agreement contains
or has contained (in the case of land, above or below ground) a
Hazardous Substance.
12.3 ENVIRONMENTAL PERMITS AND LAW
Where necessary the Company has obtained all necessary Environmental
Permits, all of which are valid and subsisting and has at all times
complied with the terms and conditions of each Environmental Permit and
all Environmental Laws.
12.4 ENVIRONMENTAL PROCEEDINGS
Neither the Company, nor a person for whose acts or defaults the Company
may be vicariously liable, is involved or has, during the two years
ending on the date of this Agreement, been involved in an Environmental
Proceeding. No Environmental Proceeding is pending or threatened by or
against the Company or a person for whose acts or defaults the Company
may be vicariously liable. To the best of the Seller's knowledge,
information and belief, no fact or circumstance exists which might give
rise to an Environmental Proceeding involving the Company or a person
for whose acts or defaults the Company may be vicariously liable. So far
as the Sellers are aware there are no outstanding notice, judgment,
order, decree, arbitral award or decision of a court, tribunal,
arbitrator or governmental agency involving the Company or any such
person relating to any such matters as are mentioned in this Warranty.
13 AGREEMENTS
13.1 VALIDITY OF AGREEMENTS
13.1.1 To the best of the Sellers knowledge, information and belief, no
fact or circumstance exists which might invalidate or give rise
to a ground for termination, avoidance or repudiation of an
agreement, arrangement or obligation to which the Company is a
party. No party with whom the Company has entered into an
agreement, arrangement or obligation has given notice of its
intention to terminate, or has sought to repudiate or disclaim,
the agreement, arrangement or obligation.
13.1.2 Neither the Company nor any party with whom the Company has
entered into an agreement, arrangement or obligation is in
material breach of the agreement, arrangement or obligation. To
the best of the Sellers knowledge, information and belief, no
fact or circumstance exists which might give rise to a breach of
this type.
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13.2 LONG TERM ETC. AGREEMENTS
13.2.1 The Company is not a party to, and is not liable under, a
long-term, onerous or unusual agreement, arrangement or
obligation including, without limitation:
(a) an agreement, arrangement or obligation entered into
other than in the usual course of its business;
(b) an agreement, arrangement or obligation entered into
other than by way of a bargain at arm's length;
(c) an agreement, arrangement or obligation restricting the
Company's freedom to operate the whole or part of its
business or to use or exploit any of its assets;
(d) a sale or purchase, option or similar agreement,
arrangement or obligation affecting an asset owned,
occupied, possessed or used by the Company or by which
the Company is bound;
(e) a material agreement, arrangement or obligation with
which the Company cannot comply on time or without undue
or unusual expenditure of money or effort; or
(f) any agreement pursuant to which the Company could be
liable in connection with any claim relating to lost,
stolen or damaged. Images including without limitation
any agreement that requires the payment of compensation
in relation to such claims.
13.2.2 The Company is not:
(a) a member of a joint venture, consortium, partnership or
association (other than a bona fide trade association);
or
(b) a party to a distributorship, agency, sales promotion,
market research, marketing, consulting and advertising,
franchise or management agreement or arrangement or any
other agreement that compensates any person based on any
sales by the Company.
13.3 Except as set out in the Disclosure Letter since 1 July 1998:
(a) there has not been any termination of the business
relationship of the Company with any franchisee or
material licensee, customer or supplier;
(b) to the Sellers knowledge, there has not been any
threatened termination or withholding of payments by, or
any material dispute with, any franchisee or material
licensee, customer or supplier; and
(c) neither the Sellers nor the Company has received any
notice or been informed that any such event will occur
in the future, either as a result of the consummation of
the transactions contemplated by this Agreement or
otherwise. Except as set out in the Disclosure Letter
the Company is not currently in dispute over any terms
of any contract or
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agreement to which the Company and any franchisee or
material licensee, customer or supplier is a party.
13.4 ARTIST AGREEMENTS
13.4.1 Notwithstanding any reference to any other name in the Artist
Agreements, the Company is the sole party specified as the
"Artist" in each of the Artist Agreements (in its own capacity
and not in the capacity as agent for or otherwise on behalf of
any other party) and all of those agreements have been signed by
either of the Warrantors on behalf of the Company and in their
respective capacities as directors of the Company.
13.4.2 Neither of the Warrantors nor any other person other than the
Company or TIB is a party to or has any rights or obligations
under any of the Artist Agreements or the M. Loco LDA, as the
case may be.
13.4.3 The Artist Agreement relating to the artist Inone contains the
same terms and conditions as the other Artist Agreements.
13.5 M LOCO MDA
13.5.1 Notwithstanding any reference to any other name in the M. Loco
LDA, the Company is the sole party specified as the "Production
Company", "Company" or "Producer" in the M. Loco LDA (in its own
capacity and not in the capacity as agent for or otherwise on
behalf of any other party) and this agreement has been signed by
either of the Warrantors on behalf of the Company and in their
respective capacities as directors of the Company.
13.5.2 Neither of the Warrantors nor any other person other than the
Company or TIB is a party to or has any rights or obligations
under the M. Loco LDA.
13.6 PHOTOGRAPHER AGREEMENTS
13.6.1 The Company is the licensee in each of the Photographer
Agreements.
13.6.2 All royalties due under each Photographer Agreement have been
paid in full and no amount is owing under any Agreement.
13.6.3 The agreements defined as the Photographer Agreements are the
only agreements or arrangements (whether written or otherwise)
that the Company has entered into with photographers (other than
the M. Loco Photographer Agreements).
13.6.4 Marc Grimburg has assigned to the Company all his rights under
the Photographer Agreement relating to Marc Grimburg and the
Agreement has been terminated in accordance with its terms and
without any liability to the Company and the Company has paid
all instalments, licence fees and other payments due under the
Agreement and no instalments, licence fees or other payments are
or will become due or outstanding under the Agreement or
otherwise to Marc Grimburg.
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13.7 M. LOCO PHOTOGRAPHER AGREEMENTS
13.7.1 Other than the M. Loco Photographer Agreements, no other
contracts have been entered into by the Company in furtherance
of the M. Loco LDA.
13.7.2 Those M. Loco Photographer Agreements marked with an "*" in
Schedule 9 have been validly terminated in accordance with their
terms and without any liability to the Company.
13.8 SOFTWARE DEVELOPMENT AGREEMENT
13.8.1 The Company has paid all instalments, licence fees and other
payments due under the Software Development Agreement and no
instalments, licence fees or other payments are or will become
due or outstanding under the Software Development Agreement.
13.8.2 So far as the Sellers are aware, the Software Development
Agreement is valid and enforceable in accordance with its terms.
13.8.3 The Software Development Agreement is not subject to the terms
of any other agreement.
13.8.4 The Escrow Agreement (as defined in the Software Development
Agreement) is in force and the Source Code is being held by the
Custodian (as defined in the Software Development Agreement).
13.8.5 The Program (as defined in the Software Development Agreement)
is complete and has been accepted by the Company in accordance
with the terms of the Software Development Agreement.
13.9 ARRANGEMENT WITH JKD COMMUNICATIONS LIMITED
13.9.1 The Company engaged JKD Communications Limited to develop the
interface graphics of the Application (as defined in the
Software Development Agreement) and the Company has:
(a) paid all instalments, licence fees and other payments
due to JKD Communications Limited in respect of such
services and no additional instalments, licence fees or
other payments are or will become due or outstanding to
JKD Communications Limited;
(b) the development of the Application by JKD Communications
Limited is complete and the relevant resulting materials
produced by such development has been accepted by the
Company;
13.9.2 The Company has never entered into the separate agreement with
JKD Agreement referred to in the Software Development Agreement
and there is no subsisting agreement between the Company and JKD
Communications Limited in connection with the Software
Development Agreement.
13.10 ZOMA FILM AGREEMENT
13.10.1 The Company has entered into a film contract known as the "ZOMA
Agreement" dated 1 January 1994 with TIB Inc. and the Company on
TIB's
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standard terms of business and TIB are the sole parties to this
Agreement and the Company has entered into this Agreement in its
own capacity and not in the capacity as agent for or otherwise
on behalf of any other party and the Agreement has been signed
by either of the Warrantors on behalf of the Company and in
their respective capacities as directors of the Company.
13.10.2 Neither of the Warrantors nor any other person other than the
Company or TIB is a party to or has any rights to obligations
under the Agreement referred to in clause 3.10.1 of these
Warranties.
13.11 TRANSFER AGREEMENTS
13.11.1 The Company has acquired Images from each of Martin Hooper, Leo
Mason, Gary Norman and Tony Hill and all rights (including
intellectual property rights) ever owned and licensed to the
Company by such persons now vest in the Company and no
instalments, licence fees or other payments are currently or
will ever become due or outstanding to such persons and the
Company has no liability whatsoever to such persons.
14 TERMS OF TRADE AND BUSINESS
14.1 CREDITORS
The Company has paid its creditors within the times agreed with them. No
debt owing by it has been due for more than four weeks.
14.2 SUPPLIERS AND CUSTOMERS
14.2.1 During the year ending on the date of this Agreement no
substantial supplier or customer of the Company has:
(a) stopped, or indicated an intention to stop, trading with
the Company;
(b) reduced, or indicated an intention to reduce,
substantially its trading with the Company; or
(c) changed or indicated an intention to change,
substantially the terms on which it is prepared to trade
with the Company.
14.2.2 The Company has not entered into an agreement or arrangement
with a supplier or customer on terms materially different to its
standard terms of business, a copy of which is annexed to the
Disclosure Letter.
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14.3 COMPUTER RECORDS
None of the records, systems, data or information of the Company is
recorded, stored, maintained, operated or otherwise wholly or partly
dependent on or held or accessible by any means (including, without
limitation, an electronic, mechanical or photographic process
computerised or not) which are not under the exclusive ownership and
direct control of the Company.
15 EFFECT OF SALE
Neither the execution nor the performance of this Agreement or any
document to be executed at or before Completion will result in the
Company losing the benefit of an asset, grant, subsidy, right or
privilege which it enjoys at the date of this Agreement or will;
15.1 conflict with;
15.2 result in a breach of;
15.3 give rise to an event of default under;
15.4 require the consent of a person under;
15.5 enable a person to terminate; or
15.6 relieve a person from an obligation under
any agreement or arrangement to which the Company is a party or any legal or
administrative requirement by which the Company is bound.
16 EMPLOYEES
16.1 GENERAL
16.1.1 There is no employment or other contract of engagement between
the Company and any of its directors or other officers. The
Company is not a party to a consultancy contract.
16.1.2 There is no employment contract between the Company and any of
its employees which cannot be terminated by the Company by three
months' notice or less without giving rise to a claim for
damages or compensation (other than a statutory redundancy
payment or statutory compensation for unfair dismissal). The
Company has not received notice of resignation from any of its
directors, managers or senior employees.
16.1.3 There is no employment or consultancy contract or other contract
of engagement between the Company and any person which is in
suspension or has been terminated but is capable of being
revived or enforced or in respect of which the Company has a
continuing obligation.
16.1.4 The Disclosure Letter contains details of:
(a) the total number of the Company's employees including
those who are on maternity leave or absent because of
disability or other long-term
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leave of absence and who have or may have a right to
return to work with the Company;
(b) the name, date of start of employment, period of
continuous employment, salary and other benefits, grade
and age of each employee of the Company and, where an
employee has been continuously absent from work for more
than one month, the reason for the absence; and
(c) the terms of the contract of each director, other
officer and employee of the Company entitled to
remuneration at an annual rate, or an average annual
rate over the last three financial years, of more than
Pound Sterling25,000.
16.1.5 The basis of the remuneration payable to the Company's
directors, other officers and employees is the same as that in
force at the Last Accounting Date. The Company is not obliged to
increase, nor has it made provision to increase, the total
annual remuneration payable to its directors, other officers and
employees by more than five per cent. or to increase the rate of
remuneration of a director, other officer or employee entitled
to annual remuneration of more than Pound Sterling25,000.
16.1.6 The Company owes no amount to a present or former director,
other officer or employee of the Company (or his dependant)
other than for accrued remuneration or reimbursement of business
expenses.
16.1.7 There is no agreement or arrangement between the Company and an
employee or former employee with respect to his employment, his
ceasing to be employed or his retirement which is not included
in the written terms of his employment or previous employment.
The Company has not provided, or agreed to provide, a gratuitous
payment or benefit to a director, officer or employee or to any
of their dependants.
16.1.8 The Company has maintained up-to-date, full and accurate records
regarding the employment of each of its employees (including,
without limitation, details of terms of employment, payments of
statutory sick pay and statutory maternity pay, income tax and
social security contributions, disciplinary and health and
safety matters) and termination of employment.
16.2 PAYMENTS ON TERMINATION
Except as disclosed in the Accounts, the Company has not:
16.2.1 incurred a liability for breach or termination of an employment
contract including, without limitation, a redundancy payment,
protective award and compensation for wrongful dismissal, unfair
dismissal and failure to comply with an order for the
reinstatement or re-engagement of an employee;
16.2.2 incurred a liability for breach or termination of a consultancy
agreement; or
16.2.3 made or agreed to make a payment or provided or agreed to
provide a benefit to a present or former director, other officer
or employee of the Company or to any of their dependants in
connection with the actual or proposed termination or suspension
of employment or variation of an employment contract.
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16.3 COMPLIANCE WITH LAW
So far as the Sellers are aware, the Company has complied with each
obligation imposed on it by, and each order and award made under,
statute, regulation, code of conduct and practice, collective agreement,
custom and practice relevant to the relations between it and its
employees or a trade union or the terms of employment of its employees.
16.4 REDUNDANCIES AND TRANSFER OF BUSINESS
Within the year ending on the date of this Agreement the Company has
not:
16.4.1 given notice of redundancies to any governmental department or
started consultations with a trade union; or
16.4.2 been a party to a relevant transfer (as defined in the Transfer
of Undertakings (Protection of Employment) Regulations 1981) or
failed to comply with a duty to inform and consult a trade union
under those Regulations.
16.5 TRADE UNIONS
16.5.1 The Company has no agreement or arrangement with and does not
recognise a trade union, works council, staff association or
other body representing any of its employees.
16.5.2 The Company is not involved in, and no fact or circumstance
exists which might give rise to, a dispute with a trade union,
works council, staff association or other body representing any
of its employees.
16.6 INCENTIVE SCHEMES
The Company does not have and is not proposing to introduce a share
incentive, share option, profit sharing, bonus or other incentive scheme
for any of its directors, other officers or employees.
17 PENSIONS AND OTHER BENEFITS
17.1 Apart from the Disclosed Personal Pension Schemes the Company does not
operate and has not in the past operated and no proposal has been
announced to enter into or establish any arrangement or practice
(whether legally enforceable or not and whether approved or not) to
provide pensions, gratuities, lump sums or other "relevant benefits"
within the meaning of Section 612 of the Taxes Act to or for the benefit
of any of its past or present directors or employees or their dependants
and there are no retirement benefit or pension or death benefit or
similar schemes or arrangements in relation to which the Company
contributes.
17.2 The Disclosure Letter contains details of the basis upon which the
Company has undertaken to contribute to the Disclosed Personal Pension
Schemes and no amount due by the Company to the Disclosed Personal
Pension Schemes is unpaid.
17.3 No assurance, promise or guarantee (oral or written) has been made or
given to Rubina Marshall or Ian Morris of any particular level or amount
of benefits to be provided for or in respect of them on retirement,
death or leaving service.
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18 LIABILITIES
18.1 INDEBTEDNESS
Except as disclosed in the Disclosure Letter, the Company does not have
outstanding and has not agreed to create or incur loan capital,
borrowing or indebtedness in the nature of borrowing.
18.2 GUARANTEES AND INDEMNITIES
18.2.1 The Company is not a party to and is not liable under a
guarantee, indemnity or other agreement to secure or incur a
financial or other obligation with respect to another person's
obligation.
18.2.2 No part of the loan capital, borrowing or indebtedness in the
nature of borrowing of the Company is dependent on the guarantee
or indemnity of, or security provided by, another person which
is not a Group Company.
18.3 EVENTS OF DEFAULT
No event has occurred or been alleged to have occurred which:
18.3.1 constitutes an event of default, or otherwise gives rise to an
obligation to repay, under an agreement relating to borrowing or
indebtedness in the nature of borrowing (or will do so with the
giving of notice or lapse of time or both); or
18.3.2 will lead to an Encumbrance constituted or created in connection
with borrowing or indebtedness in the nature of borrowing, a
guarantee, an indemnity or other obligation of the Company
becoming enforceable (or will do so with the giving of notice or
lapse of time or both).
18.4 GRANTS
18.4.1 The Company is not liable to repay an investment or other grant
or subsidy made to it by a public or government body.
18.4.2 No fact or circumstance (including, without limitation, the
execution and performance of this Agreement) exists which might
entitle a body to require repayment of, or refuse an application
by the Company for, the whole or part of a grant or subsidy.
19 PERMITS
Nothing in this Warranty relates to any Environmental Permit.
19.1 The Company has obtained, and has complied with the terms and conditions
of, each Permit.
19.2 Details of each Permit are set out in the Disclosure Letter.
19.3 Each Permit is in force, unimpeachable and unconditional or subject only
to a condition that has been satisfied. No expenditure or work is or
will be necessary to comply with, maintain or obtain a Permit. To the
best of the Sellers knowledge, information and belief, no Permit will be
revoked, suspended, cancelled, varied or not renewed.
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19.4 Each action required for the renewal or extension of each Permit has
been taken.
19.5 No Permit will be revoked, suspended, cancelled, varied or not renewed
as a result of the execution or performance of this Agreement or any
document to be executed at or before Completion.
20 INSOLVENCY, WINDING UP ETC.
20.1 WINDING UP AND ADMINISTRATION
No order has been made, petition presented or resolution passed for the
winding up of the Company or for the appointment of a provisional
liquidator to the Company and no administration order has been made in
respect of the Company.
20.2 RECEIVERSHIP
No receiver or receiver and manager has been appointed of the whole or
part of the Company's business or assets.
20.3 INSOLVENCY
The Company is not insolvent or unable to pay its debts.
20.4 PAYMENT OF DEBTS
The Company has not stopped paying its debts as they fall due.
20.5 DISTRESS ETC.
No distress, execution or other process has been levied on an asset of
the Company.
20.6 UNSATISFIED JUDGMENTS
There is no unsatisfied judgment or court order outstanding against the
Company.
20.7 STRIKING OUT
No action is being taken to strike the Company off the Register of
Companies in the United Kingdom.
21 COMPETITION
21.1 MARKET POSITION
The Company is not in a dominant position in a market in the European
Communities or European Economic Area, or a substantial part of a market
in the European Communities or European Economic Area, for the purposes
of Article 82 of the Treaty of Rome and Article 54 of the Agreement on
the European Economic Area.
21.2 STATE AID
The Company has never received, nor is the Company proposing to receive,
any aid (as that term is understood for the purposes of Articles 87 to
89 of the Treaty of Rome) from a Member State of the European
Communities or from State resources.
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22 LITIGATION AND COMPLIANCE WITH LAW
Nothing in this Warranty concerns any Environmental Proceedings or
Environmental Investigation or any matters concerned with any
Intellectual Property owned or used by the Company.
22.1 LITIGATION
22.1.1 Neither the Company nor, so far as the Sellers are aware, a
person for whose acts or defaults the Company may be vicariously
liable is involved, or has during the two years ending on the
date of this Agreement been involved, in a civil, criminal,
arbitration, administrative or other proceeding. No civil,
criminal, arbitration, administrative or other proceeding is
pending or threatened by or against the Company or a person for
whose acts or defaults the Company may be vicariously liable.
22.1.2 To the best of the Sellers knowledge, information and belief, no
fact or circumstance exists which might give rise to a civil,
criminal, arbitration, administrative or other proceeding
involving the Company or a person for whose acts or defaults the
Company may be vicariously liable.
22.1.3 There is no outstanding judgment, order, decree, arbitral award
or decision of a court, tribunal, arbitrator or governmental
agency against the Company or a person for whose acts or
defaults the Company may be vicariously liable.
22.2 COMPLIANCE WITH LAW
So far as the Sellers are aware, the Company has conducted its business
and dealt with its assets in all material respects in accordance with
all applicable legal and administrative requirements.
22.3 INVESTIGATIONS
There is not and has not been any governmental or other investigation,
enquiry or disciplinary proceeding concerning the Company and, so far as
the Sellers are aware, none is pending or threatened. To the best of the
Sellers knowledge, information and belief, no fact or circumstance
exists which might give rise to an investigation, enquiry or proceeding
of that type.
22.4 UNLAWFUL PAYMENTS
Neither the Company nor any person for whose acts or defaults the
Company may be vicariously liable has:
22.4.1 induced a person to enter into an agreement or arrangement with
the Company by means of an unlawful or immoral payment,
contribution, gift or other inducement;
22.4.2 offered or made an unlawful or immoral payment, contribution,
gift or other inducement to a government official or employee;
or
22.4.3 directly or indirectly made an unlawful contribution to a
political activity.
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23 INSIDER AGREEMENTS
There is not, and during the nine months ending on the date of this
Agreement there has not been, any agreement or arrangement (legally
enforceable or not) to which the Company is or was a party and in which
the Sellers, a director or former director of the Company or a person
connected with any of them is or was interested in any way. For this
purpose, "CONNECTED" has the meaning given by section 839 of the Taxes
Act, except that in construing section 839 "CONTROL" has the meaning
given by section 840 or section 416 of the Taxes Act so that there is
control whenever either section 840 or 416 requires.
24 CONSTITUTION, REGISTERS AND RETURNS
24.1 CONSTITUTION
The Company is operating and has always operated its business in all
respects in accordance with its memorandum and articles of association
at the relevant time.
24.2 REGISTERS ETC.
Each register, minute book and other book which the Company is required
to keep has been properly kept and contains a complete and accurate
record of the matters which it is required to record. No notice has been
received or allegation made that a register or book is incorrect or
should be rectified.
24.3 RETURNS ETC.
All returns, particulars, resolutions and other documents required to be
delivered by the Company to the Registrar of Companies or another
governmental or other authority or agency have been properly prepared
and delivered.
24.4 POWERS OF ATTORNEY AND AUTHORITIES
The Company has not given a power of attorney or other authority by
which a person may enter into an agreement, arrangement or obligation on
the Company's behalf (other than an authority for a director, other
officer or employee to enter into an agreement in the usual course of
that person's duties).
25 BROKERAGE OR COMMISSIONS
No person is entitled to receive a finder's fee, brokerage or commission
from the Company in connection with this Agreement.
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<PAGE> 57
SCHEDULE 4
TAX WARRANTIES
1 GENERAL
1.1 TAX RETURNS All information, notices, accounts, statements, reports,
computations and returns which the Company was required to make or give
have been properly and duly submitted by the Company to the Inland
Revenue, HM Customs & Excise and any other relevant taxation or excise
authorities whether of the United Kingdom or elsewhere and all
information, notice, computations and returns submitted to the Inland
Revenue, HM Customs & Excise and such other authorities are true and
accurate and are not the subject of any material dispute nor so far as
the Warrantors are aware are likely to become the subject of any
material dispute with such authorities.
1.2 TAXATION LIABILITIES All taxation of any nature whatsoever whether of
the United Kingdom or elsewhere for which the Company is liable to
account has been duly paid (insofar as such taxation ought to have been
paid) and, without prejudice to the generality of the foregoing, the
Company has made all such deductions and retentions as it was obliged to
make and all such payments as should have been made.
1.3 PENALTIES AND INTEREST The Company has not since its incorporation paid
or become liable to pay, nor so far as the Warrantors are aware are
there any circumstances by reason of which the Company is likely to
become liable to pay, any penalty, fine, surcharge or interest, whether
charged by virtue of the provisions of the Taxes Management Act 1970,
VATA 1994 or otherwise.
1.4 INVESTIGATIONS The Company has not within the past twelve months
suffered any investigation audit or visit by the Inland Revenue, HM
Customs & Excise, Department of Social Security, or any other taxation
or excise authority other than of a routine nature, and the Warrantors
are not aware of any such investigation audit or visit planned for the
next twelve months.
2 DISTRIBUTIONS AND OTHER PAYMENTS
2.1 The Company has not at any time since its incorporation repaid or agreed
to repay or redeemed or agreed to redeem or purchased or agreed to
purchase or granted an option under which it may become liable to
purchase any shares of any class of its issued share capital.
2.2 The Company has not at any time since its incorporation capitalised or
agreed to capitalise in the form of shares or debentures any profits or
reserves of any class or description or otherwise issued or agreed to
issue any share capital other than for the receipt of new consideration
(within the meaning of Part VI of the Taxes Act 1988) or passed or
agreed to pass any resolution to do so.
2.3 All rents, annual payments and other sums of an income nature paid or
payable by the Company since the Last Accounts Date or which the Company
is under an obligation to pay in the future are wholly allowable as
deductions or charges in computing income for the purposes of
corporation tax.
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<PAGE> 58
2.4 The Company has not received any capital distribution to which the
provision of Section 189 of the Taxation of Chargeable Gains Act 1992
could apply.
2.5 LOAN RELATIONSHIPS All interest, discounts or premiums payable by the
Company in respect of its loan relationships within the meaning of
Chapter II of Part IV of the Finance Act 1996 are capable of being
brought into account as a debit for the purposes of that Chapter as and
to the extent that they are from time to time recognised in the
Company's Accounts (assuming that the accounting policies and methods
adopted for the purpose of the Accounts continue to be so adopted).
3 CAPITAL ALLOWANCES
No balancing charge under the Capital Allowances Act 1990 (or other
legislation relating to any capital allowances) would be made on the
Company on the disposal of any pool of assets (that is to say all those
assets expenditure relating to which would be taken into account in
computing whether a balancing charge would arise on a disposal of any
other of those assets) or of any asset not in such a pool, on the
assumption that the disposals are made for a consideration equal to the
book value shown in or adopted for the purpose of the Accounts for the
assets in the pool or (as the case may be) for the asset.
4 CAPITAL GAINS
4.1 ACQUISITION COSTS The book value shown in or adopted for the purpose of
the Accounts as the value of each of the assets of the Company on the
disposal of which a chargeable gain or allowable loss could arise does
not exceed the amount which on a disposal of such asset at the date of
this Agreement would be deductible under s.38 TCGA 1992.
4.2 CLAIMS FOR ROLL-OVER AND HOLD-OVER OF GAINS The Disclosure Letter sets
out full particulars of all claims and elections made (or assumed in the
Accounts to be made) under s.23, s.247, s.248, s.152, s.158, s.161,
s.162 or s.165 TCGA 1992 (indicating which claims are provisional)
insofar as they could affect the chargeable gain or allowable loss which
would arise in the event of a disposal after the Last Accounts Date by
the Company of any of its assets, and indicates which assets (if any) so
affected would not on disposal give rise to relief under Schedule 4 TCGA
1992.
4.3 TRANSACTIONS NOT AT ARM'S LENGTH The Company has not acquired any asset
in circumstances such that s.17 TCGA 1992 could apply to such
acquisition nor given or agreed to give any consideration to which
s.128(2)(b) TCGA 1992 could apply.
5 EMPLOYEES
5.1 COMPENSATION FOR LOSS OF OFFICE The Company is not under an obligation
to pay nor has it since the Last Accounts Date paid or agreed to pay any
compensation for loss of office or any gratuitous payment not deductible
in computing its income for the purposes of Corporation Tax.
5.2 PENSION CONTRIBUTIONS Since the Last Accounts Date the Company has not
made any payment which may be wholly or partially disallowed as an
expense or expense of management under s.112 Finance Act 1993 nor did
any circumstances exist at the Last Accounts Date which could result in
any payment made after that date being so disallowed.
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<PAGE> 59
6 CLOSE COMPANIES
6.1 The Company is not and has not been since its incorporation a close
investment-holding company as defined by s.13A Taxes Act 1988.
6.2 CLOSE COMPANY DISTRIBUTIONS No distribution within s.418 Taxes Act 1988
has been made by the Company since its incorporation.
6.3 LOANS BY CLOSE COMPANIES No loan or advance made by or debt incurred to
or assigned to the Company falling within the provisions of s.419 Taxes
Act 1988 (as extended by s.422 thereof) is outstanding or has been
waived since the Last Accounts Date.
7 GROUP COMPANIES
The Company is not and has not since incorporation been a member of a group of
companies for tax purposes.
8 OVERSEAS INTERESTS
8.1 UK RESIDENCE The Company is and has throughout the past seven years been
resident in the United Kingdom for corporation tax purposes and is not
and has not been treated as resident in any other jurisdiction for any
tax purpose.
8.2 TREASURY CONSENT FOR MIGRATION OF COMPANIES, ETC. The Company has not
carried out or caused or permitted to be carried out any of the
transactions (i) specified at the relevant time in s.765(1) Taxes Act
1988 otherwise than with the prior consent of H.M. Treasury and (in the
case of a special as opposed to general consent) full particulars of
which are contained in the Disclosure Letter or (ii) specified at the
relevant time in s.765A Taxes Act 1988 without having duly provided the
required information to the Board of Inland Revenue.
9 TAX AVOIDANCE
9.1 The Company has not been a party to any transaction the main purpose of
which was the avoidance of tax and to which the principles in the line
of cases involving Furniss v. Dawson apply.
9.2 TRANSACTIONS BETWEEN PERSONS UNDER COMMON CONTROL No transactions or
arrangements involving the Company and a person which is not the Company
have taken place or are in existence which are such that any of the
provisions of Schedule 28AA Taxes Act 1988 have been or could be applied
to them.
9.3 DEPRECIATORY TRANSACTIONS The Company has not been a party to any
transaction to which the provisions of s.176 or s.177 TCGA 1992 could be
applied.
10 STAMP DUTY
All documents which are necessary to establish the Company's title to any assets
and which attract Stamp Duty in the United Kingdom have been duly stamped.
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<PAGE> 60
11 VALUE ADDED TAX
11.1 REGISTRATION The Company is duly registered for the purposes of Value
Added Tax with quarterly prescribed accounting periods and no such
registration is subject to any conditions imposed by or agreed with HM
Customs & Excise.
11.2 EXEMPTION The Company is not nor was partially exempt in its current or
preceding Value Added Tax year.
11.3 OPTION TO CHARGE VAT ON SUPPLIES BY THE COMPANY The Disclosure Letter
contains particulars of all elections to waive exemption made or agreed
to be made under Schedule 10 to the VATA 1994 by (i) the Company or (ii)
any person in relation to which the Company is a relevant associate as
defined in paragraph 3(7) of Schedule 10 to the VATA 1994.
11.4 CAPITAL GOODS SCHEME The Company does not own an asset which is a
capital item within the meaning of Part XV of the Value Added Tax
Regulations 1995.
12 INHERITANCE TAX
12.1 No transfer of value (as defined by the Inheritance Tax Act 1984) or
disposal by way of a gift (within the meaning of Section 102 Finance Act
1986) has at any time been made by or to the Company, and so far as the
Warrantors are aware there are no circumstances by reason of which any
liability in respect of inheritance tax has risen or could arise on the
Company.
12.2 No Inland Revenue Charge (as defined in Section 237 Inheritance Tax Act
1984) is outstanding over any asset of the Company or in relation to any
shares in the capital of the Company and so far as the Warrantors are
aware no circumstances exist which could lead to any such charge arising
in the future.
12.3 So far as the Warrantors are aware, there are not in existence any
circumstances whereby any such power as is mentioned in Section 212(1)
Inheritance Tax Act 1984 could be exercised in relation to any shares,
securities or assets of the Company.
57
<PAGE> 61
SCHEDULE 5
REAL PROPERTY
PART A
REGISTERED LAND
FREEHOLD
None
LEASEHOLD
None
58
<PAGE> 62
PART B
UNREGISTERED LAND
FREEHOLD
None
LEASEHOLD
<TABLE>
<CAPTION>
BRIEF DESCRIPTION PRESENT TENANT LEASE DATE AND PARTIES TERM EXPIRING
(i)
<S> <C> <C> <C>
Aldus House, 17 The Company 21 August 1996 24 March 2014
Conway Street,
London W1 (1) Wilfred Richard Cass
Mark Neil Cass
Pointon York Trustees Ltd
(2) Wilfred Richard Cass
Mark Neil Cass
Part of lower ground floor, The Company 16 February 1994 24 December 2005
4 Jordan Street,
Manchester (1) Richard John Morris
(2) Mark Neil Cass
Wilfred Richard Cass
(ii)
Lower ground floor, The Company 11 September 1998 10 September 2001
57 Melville Street,
Edinburgh
(1) Ferrum Holdings Limited
(2) The Company
IRISH PROPERTY -- LEASE NOT COMPLETED
Basement floor, 11 Mark Cass (1) David Molony Not applicable
Upper Mount Street, Ivan Purdie
Dublin (2) Mark Cass and
Ian Purdie
</TABLE>
59
<PAGE> 63
PART C
OTHER PROPERTY WORLDWIDE
Brief description Country in which Title number Present use
situated
None
60
<PAGE> 64
SCHEDULE 6
ARTIST AGREEMENTS
<TABLE>
<CAPTION>
NAME OF ARTIST DATE OF AGREEMENT AGREEMENT REFERENCE
<S> <C> <C>
Infocus International 10 February 1996 650
Goodwood Productions 25 November 1998 7004
Infocus International 14 June 2000 1353
Fast Track 25 September 1998 4014
Real Life 1 October 1998 4031
Third Age 13 March 1995 4100
Third Age 6 June 1995 4100
Johnny A Ready 23 November 1994 4065
Johnny A Ready 17 September 1999 4065
Henry Sims 6 June 1995 4105
Samantha Messens 21 July 1995 4106
Ian Royd 21 July 1995 4107
Chronoscope 21 July 1997 4126
James Stirling 2 July 1997 4127
Alan Danaher 28 January 1998 1724
Noah Goss 26 January 1998 1723
Bertram Henry 18 March 1997 4122
Inone Unknown 660
</TABLE>
61
<PAGE> 65
SCHEDULE 7
HAT HILL WARRANTIES
1 The Hat Hill Trustees are the joint legal owners of the shares in the
Company set out opposite their names in Schedule 1 free from Security
Interests of any nature whatsoever.
2 Shares set out opposite the Hat Hill Trustees names constitute all the
shares in the Company which have been allotted and issued to the Hat Hill
Trustees.
3 The Hat Hill Trustees have the right, power and authority and has taken all
other actions necessary to enable them to sell the shares in the Company
set opposite their name in Schedule 1.
4 The Hat Hill Trustees are entitled to sell and procure the sale of their
full legal interest in the shares in the Company set opposite their names
in Schedule 1 to the Buyer.
5 The list of documents set out in the relevant Opinion referred to in Clause
4.2.13 is a complete list of all documents, deeds or other agreements
constituting the Hat Hill Trust and relating to the appointment of the
Trustees, or having a bearing on the Trusteeship thereof.
62
<PAGE> 66
SCHEDULE 8
PHOTOGRAPHER AGREEMENTS
<TABLE>
<CAPTION>
NAME OF PHOTOGRAPHER DATE OF AGREEMENT AGREEMENT REFERENCE
<S> <C> <C>
Peter Hince 30 June 1994 [4031]
Paul Simcock 22 February 1995 [4100]
J Boylan 25 August 1994 [4065]
Paul Simcock 19 November 1997 [4105]
Henry Sims 10 April 1997 [4105]
Paul Simcock Made 8 June 1995 but signed 9 October 1995 [4105]
Nigel and Carl Attard Made 1 March 1997 but signed 7 May 1997 [4126]
Tim Platt AKA James Stirling Made 28 October 1998 but signed 16 November 1998 [4127]
Tim Platt Made 26 March 1997 but signed 21 April 1997 [4127]
Craig Fordham Made 28 August 1997 but signed 14 November 1997 [1724]
Craig Fordham AKA Alan Danher 23 September 1998 [1724]
Mark Gosbee Made 26 March 1997 but signed 15 July 1997 [1723]
Martin Poole AKA Infocus/John Poole Made 28 August 1997 but signed 23 March 1997 [650/1]
Charles Anderson 26 June 1998 [650/2]
Andy Bullock AKA ADB Made 22 October 1998 but signed 25 October 1998 [650/3]
Martin Morrell 22 October 1998 [650/4]
Marc Grimburg Unknown [660]
</TABLE>
63
<PAGE> 67
SCHEDULE 9
M. LOCO PHOTOGRAPHER AGREEMENTS
<TABLE>
<CAPTION>
NAME OF ARTIST DATE OF AGREEMENT
<S> <C>
*Zac Macaulay 1 July 1999
*Tom McGhee 18 March 1999
Martin Poole AKA Connor 18 March 1999
*Richard Kolker 18 January 1999
*Michael Diggin Unknown
*John Potter Unknown
*Martin Peters Unknown
</TABLE>
64
<PAGE> 68
EXECUTED by the parties on the date first written above
MARK NEIL CASS )
) ----------------------------------------
WILFRED RICHARD CASS )
) ----------------------------------------
THE TRUSTEES OF THE )
WILFRED RICHARD CASS )
DISCRETIONARY SETTLEMENT ) ----------------------------------------
WILFRED RICHARD CASS
----------------------------------------
MARK NEIL CASS
----------------------------------------
GEOFFREY PICKERILL
----------------------------------------
FOR AND ON BEHALF OF THE LAWRENCE
GRAHAM TRUST CORPORATION
----------------------------------------
FOR AND ON BEHALF OF THE LAWRENCE
GRAHAM TRUST CORPORATION
Signed by a duly authorised representative )
for and on behalf of )
GETTY IMAGES INC. )-----------------------------------
65